In the credit card processing industry Interchange is generally considered a cost of doing business. For non-profit organizations however, Interchange fees take a bite directly out of incoming donations. Since these donations are the main source of income for charitable organizations, companies often seek alternative methods. Charitable and Social Service Organizations can benefit from Host Merchant Services and HMS Gives, the credit card processing solution specifically designed for them. In addition to the great service and targeted focus of HMS processing solutions, there is a great low rate designed just for these organizations.
Visa introduced the Consumer Credit Card Charity Interchange Rate Program for charitable organizations in October 2011–– which specifically refers to organizations with the Merchant Category Code (MCC) of 8398, Charitable and Social Service Organizations – Fundraising. The interchange rate for this program is 1.35% + $0.05.
Processing requirements for this program will be the same as those for the current CPS Retail 2 Program (the previous interchange program that was available to charitable contributions):
Transaction can be a swipe or key-entered transaction.
Transaction settled within 1 day of authorization, authorization response data included in settled transaction.
Transaction must be from the MCC 8398.
Registered charities with 501(c)(3) status can often obtain significant savings on their processing costs, and thus their bottom lines by accepting donations on credit cards using an Interchange Plus merchant account. Thanks to Durbin regulated debit for both Visa and MasterCard, donations made on a debit card qualify at 0.05% and 21 cents, the lowest rate possible. The cost for a $100 donation on a debit card amounts to 26 cents. Visa credit cards qualify for the Charity Interchange Rate of 1.35% and 5 cents, donations of $100 would cost the organization $1.40 via this method. MasterCard charges 2.00% and 10 cents for credit card transactions bringing the total cost of a $100 donation to $2.10. PayPal charges 2.20% and 30 cents per transaction for both credit and debit card donations. The cost for a $100 donation via PayPal is $2.50.
Interchange Plus, also known as Cost Plus, pricing gives the customer a fixed rate over published Interchange Fees. Interchange Plus pricing is exclusively how we quote at Host Merchant Services. As you can see, there are savings to be had by using an Interchange Plus pricing model over PayPal and encouraging donations via debit cards. Below you will find a comparison table of various rates:
|Visa Regulated Debit||0.05% + $0.22||$0.26 (0.26%)|
|CPS Retail 2 CNP Debit||0.65% + $0.15||$0.80 (0.80%)|
|CPS Charity||1.35% + $0.05||$1.40 (1.40%)|
According to a Huffington Post analysis, American banks and credit card companies make huge profits — somewhere in the neighborhood of $250 million a year — off of people’s charitable donations. Host Merchant Services’ HMS Gives program strives to reduce the burden on Charitable Organizations by giving them access to the lowest rates possible. Interchange Plus pricing allows these Non-Profits to qualify for the Visa Charity Rate, as well as the regulated debit rates for both Visa and MasterCard. To find out how your Non-Profit can benefit from HMS Gives, contact us today.