The Cost of Credit Cards

Surely nonprofits and their donors want as much of their precious donation dollars as possible to directly support the frontlines. Yet, every year, tens of millions of dollars are paid by US-based nonprofits to credit card companies to process donations. A large portion of those fees could be eliminated by simply adding an ACH option for donations and encouraging donors to use it.

Nonprofits typically pay 2.5% – 3.5%, plus a transaction fee, to process credit card donations. Adding an ACH option (aka Electronic Check, Direct Debit) can help reduce those unwanted fees by processing a portion of donations via the banking system’s ACH network, which electronically transfers funds (EFT) from one bank account to another. ACH (Automated Clearing House) fees typically cost less than $0.30 per transaction, for any size donation or payment.

ACH Helps Reduce Credit Card Fees

Utilizing the ACH network is considered a “Best Practice” for businesses and other organizations with recurring payments, dues or subscriptions. Utility, Phone, Cable, Loan, Fitness, Insurance, Property Management and other “for profit” companies, with recurring transactions, all use ACH, even the IRS and DMV. Offering ACH is optimal for nonprofits because, like the organizations mentioned above, almost all nonprofits want to increase and strengthen their monthly recurring donation base.

It’s all about the Money

Credit card companies and banks offering merchant services typically don’t educate nonprofits about ACH. They certainly don’t encourage it. In fact, many credit card companies effectively discourage ACH use by exorbitantly pricing it at 1% or more. They would much rather make a percentage off of every donation than a few cents.

Many Nonprofits Offer ACH

Currently, it is estimated that between 15-20% of nonprofits, including ECFA, offer an ACH donation or payment option. Adopting and optimizing ACH can help US-based nonprofits have millions of  dollars of additional resources to support their mission and cause each year. It is the wise thing to do. So, why aren’t more nonprofits currently offering ACH? The short answer is most don’t really understand it.

Encouraging ACH Donations

Substantially reducing credit card fees will take time.  It is fairly easy to do – but requires a commitment to letting donors know that ACH is the most cost-efficient way to process donations. Below are several steps that can be done to encourage ACH use.

Education is the key. Offering an ACH option is good stewardship and savvy donors appreciate that from the organizations they support.

Website: Add an ACH donation option on your website, alongside the credit card donation option, and succinctly explain that choosing ACH will help reach more people and change more lives. It is admirable, compelling and effective.

Newsletters: Share with supporters that you now have an ACH option, educate them as to why it is preferable and encourage donors to consider modifying their payment method. Continued messaging in small section of newsletter with a link to donation page.

Response Cards: Add  an ACH option on response cards or envelopes.

Current Debit Card Donors: Most credit card statements are broken down into several categories, based on card type and method used to receive the transaction. Many donations are already being done using a debit card, which deducts funds directly through the donor’s bank account. These are very easy conversations to have and a great opportunity to contact supporters, thank them and ask them to kindly modify their payment method, which is simply providing their routing and account number instead of their debit card number.

Credit Card Expirations: Card expirations are an excellent time to reach out to your donors. Doing so prior to the expiration can help prevent lapses and increase retention. All donors will appreciate that you now offer ACH, even those collecting miles or points. Even donors who like to accumulate points, at the very least, will appreciate your organization’s thriftiness and stewardship. Many will gladly forego points and use ACH so that more of their donation will help change more lives. Many, in fact, will gladly give up their points in order to enable more of their donation to directly support the mission and cause of the nonprofit.

Common Considerations

Cost of ACH: ACH transactions should cost about $0.30 per transaction, with 0% fees, regardless of the amount of the payment or donation.

Entering an ACH donation: Making an ACH donation is simply a matter of entering the 9-digit routing number from the bottom left corner of a check and the account number.

Donor Resistance: Donors will actually respect that your organization now offers ACH, and if educated and gently encouraged to do so, many will happily modify their payment information, even those who collect miles or points.

Statement Consolidation: It is not necessary to change credit card providers to add an ACH option. In fact, most credit card companies actually offer ACH, they just don’t emphasize it primarily because they make much more money from credit card fees. Be careful, however, as some credit companies inflate their ACH rates to discourage its use thus making the savings irrelevant.

Safety and Security of ACH: The ACH Network is federally regulated by NACHA (www.nacha.org ) and is a crucial link in the national banking system, providing a central clearing facility for all Electronic Fund Transfer (EFT) transactions, including Direct Debits, Direct Deposits, Checks and Bill Pay.  It is both safe and secure.

Bookkeeper or Accounting Staff Push-back: Adding ACH is very easy to implement and reconcile. CPA’s will support using the ACH network as much as possible.


Implementing and optimizing an ACH donation option is the wise thing to do for any nonprofit that relies on or wants to increase recurring donations. It is considered a best-practice and is already being used by close to 20% of US-based nonprofits. Implementation and reconciliation is fairly simple and if donors are educated, many if not most will appreciate your organization’s good stewardship and thriftiness. Most importantly, offering and encouraging ACH usage can dramatically reduce credit card fees and get more donation dollars to the front lines.


Article by: Jeff Dowler