Paypal for dummies
July 16, 2010 7:02 AM   Subscribe

Paypal filter: Help me evaluate the pros and cons of nonprofits accepting payments via paypal.

Are there any concerns I should be aware of? Presuming that people pay the service fee on their end, is there any reason not to accept the payments as receive only.
I'm thinking that paying from a paypal acct would get sticky as far as audits etc for a nonprofit. Would be grateful fro any info or experience you've had using this.
posted by chickaboo to Work & Money (6 answers total) 1 user marked this as a favorite
I switched from PayPal to Network for Good. The interface is much better and the percentage of fees were less.

I was paying $29.95/month fee for Custom DonateNow plus 3% on transactions for NFG, but it allows people to choose a lot of options like donations in honor of others, monthly/recurring donations, plus it explains the 3% transaction fee up front very well and why the donor has to pay it (used to be optional but is now required for donor to pay it). PayPal didn't do well on any of this.

Now they are raising the monthly rates so I think it is going to be $49.95 per month, which is not so good for my small nonprofit. I am going to shop around for any better deals but will consider keeping the service.
posted by treehorn+bunny at 7:10 AM on July 16, 2010 [1 favorite]

Paypal is a nightmare. It works great when everything goes right. But when something goes wrong, it's impossible to talk to a person.

I had a legitimate customer accidentally issue a chargeback. That's what happens when the customer calls their credit card company and claims a charge is invalid. $1200 evaporated from my checking account, and I didn't get it back for two months.

Now I have a regular merchant account and my rep who set up my account answers the phone every time.
posted by pantsonfire at 7:12 AM on July 16, 2010

PayPal is fine, but be advised: Unlike Google checkout, they aren't going to ask for your documentation up front. So one day, you will find your account on restricted status, and then you will have to provide them with the documentation they ask for. I forget what it was - they wanted our 501c3 certification and a couple other things - BUT WOULD NOT ACCEPT PDFs. They would only take IMAGE FILES. I am not kidding you. It was the stupidest process I have ever dealt with in my life (possibly not, but it felt like it at the time). On the plus side, they dealt with it quickly and weren't stupid. On the minus side, I would have given them this stuff up front (like with Google).

We use the PayPal account ONLY for paying for things. We are a theater, so we eBay for props, costumes, whatever, and actually, the history it keeps is pretty good for us for that reason. It depends on what you are going to do - like collect dues or whatever - and what your record-keeping standards are. We are very small, so it's not such a problem for us.

You can lessen your Google acct charges by applying for Google Grants. We've not done it yet, because we are lazy, but we prefer Google to PayPal, regardless. Treehorn+bunny, I'm going to look into Network for Good. Thanks! :)
posted by Medieval Maven at 7:42 AM on July 16, 2010

According to their AUP you need pre-approval for collecting donations as a charity or non-profit organization, and to do that you need to sign up for a business account and submit a tax letter and bank statement proving nonprofit status. If you are a 501(c)3 then you qualify for a reduced fee structure.
posted by Rhomboid at 8:02 AM on July 16, 2010

Many people refuse to use PayPal, so you'll be cutting out those potential donors.

If you don't get too many donations, and you have a merchant account already, look into Mal's: It's free, no service charges for anybody (except what you pay to maintain your merchant account). There's a very inexpensive "premium" version that might be good if you process a lot of payments.

Mal's does hook into payment processors -- which do charge a fee -- but there's a secure option to just record, save, download, and delete credit card numbers that's a little more work for you, but can save a lot of $$. They've been around for years and years, and I've not heard of anyone having a problem, other than a minor (forgettable - don't remember the details) a few years ago, during which communication was good, IIRC.
posted by amtho at 9:37 AM on July 16, 2010

Response by poster: I've gone through the steps with paypal to establish we are a nonprofit - i don't get a ton of donations monthly, just occasional. thanks for the info. grateful for any other takes.
posted by chickaboo at 9:58 AM on July 16, 2010

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