I’d like to talk about PayPal here, because it’s used by so many folks nowadays, but also because I believe it’s pretty reliable and we’ve been using it to handle our online donations for a while now. So I can give you the benefit of some short experience here.
PayPal is a system which serves as a clearing house for online transactions. if you’ve ever had contact with the business side of online commerce, you know that when a customer uses a credit card to purchase something online, the transction is handled by a company that ultimately puts the money into your merchant account with your bank. Rather than limit themselves to credit card transactions, PayPal also supports its users in trading money back and forth amongst themselves without having to go thru a bank, and without having to set up a real merchant account. (Merchant accounts can be hard to get with a bank – they want to be sure you’re a reputable merchant.)
There is one catch, which is that PayPal “pesters” the donor to link his checking account to PayPal – so it can be a bit scary for some potential donors. I made my stomach queasy to think that I might connect my actual checking account to PayPal – what would happen if someone hacked PayPal and stole all my money? So there’s a bit of a psychological hurdle here.
But, PayPal can be used by a donor to make donations or payments to organizations, of up to $2,000 without linking a checking account. So it is easy enough to donate without having to even give a checking account number!
What we have done at the Foundation is to open our own PayPal merchant account, which connects PayPal to our checking account so that donations (incoming cash) flow directly from PayPal to our account. PayPal deducts a small fee, a little more than a credit card processor would deduct, from the donation, and it goes into our checking account within a few days as an electronic funds transfer. It is so much simpler than opening a credit card merchant account with a bank.
Then we put up a PayPal button on our web site – like this one.
The code “behind” this button specifies the merchant information, and we can have a bunch of different buttons, each one specifying donations for particular projects. The donor clicks the button (this one is live) and goes to a page on the PayPal web site where they can complete the donation.
PayPal can notify the merchant of the donation several ways. We use PayPal’s email notification, which sends a copy of the transaction (minus credit card information) to us immediately. But, PayPal can also notify your web server directly (and with some nice security verifications) so you can put the information into a database, or send a “thank you” email or trigger other automated processes.
All-in-all I think it’s pretty slick. The whole process takes just a few days to set up and verify, and is reliable and (so far) safe! You can learn more about how PayPal works with merchants and developers here at the ‘merchant’ side of their web site.
There are other online sites that specialize in accepting donations for non-profits. I’ll have more to say about that later, since we don’t have enough direct experience with them for me to say anything intelligent at the moment. And I’ll discuss the Amazon’s “Associates” program and some other stuff that might be of interest.