The 2016 Payments Ecosystem Report from Business Insider is currently trending, bringing with it some analysis of changes and trends within the payments technology industry.
For most church and nonprofit professionals, the details of the financial and payments technology industries may seem distantly removed from the work you do. And while you may not need to understand the technical details of new security developments or how new payments technology devices work, there are a few trends that will impact your life.
Diverse Payment Options
The very first paragraph of Business Insiders’s summary of the report notes how payments technology is moving beyond credit cards:
The way we pay is changing dramatically. For example, people are beginning to use their smartphones for every kind of formal and informal transaction — to shop at stores, buy songs online, and even split their rent.
A little later on in the article, the author notes how a range of other diverse technologies may be changing the industry. The “Internet of Things,” in which more and more “smart devices,” like watches, thermostats, and refrigerators, are being connected to the internet, is one example. As these technologies become more prevalent, they also diversify the way in which people will make transactions: for example, using a smart refrigerator to place an order for more milk directly from your kitchen instead of going to the store or even going to a website. Amazon’s “Dash Button” (affiliate link) are another great example, making it incredibly easy to perform a highly specific transaction, complete with payment, without even looking at your credit card.
More and more diversity in this sphere will open up a range of options and questions for church and nonprofit leaders, both in terms of income and outflow. For many nonprofit organizations and faith communities, there is an active question about whether or not to solicit electronic giving from their members and donors. Now, there will also be questions about what form or medium to accept electronic giving through, with options ranging from the current standard donation button on your website, to hitching your wagon to ecommerce platforms like Amazon using Amazon smiles to solicit donations, to exploring creative ways to facilitate donations through mobile apps and the Internet of Things. There’s space for a lot of creativity here, and it will be interesting to watch what developments unfold in the nonprofit sector.
Equally, though, this diversity will raise questions for church and nonprofit managers when it comes to how they spend their money. Some churches today still have a debate about whether or not staff should have access to business credit cards. Soon, the question will be about using services like Amazon Dash to allow your cleaning crew or order new paper goods with just the touch of a button. Or whether or not to allow staff members to connect their business card to Apple Pay on their iPhone to use “contactless” or in-app payments. Most of these developments are going to streamline the operations of churches and nonprofits, but they may also raise challenges and require adjustments to current financial practices.
Electronic Payments are Becoming More Prevalent and More Secure
The trend toward eCommerce has been building for a long time now, and it’s no longer controversial to make purchases online. Partially, this is at the encouragement of the Payments industry. As the author of Business Insider’s summary article writes, “nearly every stakeholder in the industry benefits when that process runs on digital rails.” Greater efficiency in electronic transfers and easier access to more consumers are among the factors driving this trend. And as security and fraud prevention improve, combined with even easier access through the diversity of new options developing in the industry, the motivation to push more and more payments into the electronic and digital sphere will only get stronger.
The impact of this for everyday life is that it has become so commonplace for us to use cards and electronic payments that carrying a checkbook or cash are becoming anachronistic. It is becoming increasingly common for businesses to not accept personal checks, and more and more people don’t even bother asking, they just default to their cards.
For churches and nonprofits this can prove a challenge. This is particularly pronounced for churches: if I never bring my checkbook with me anywhere and carry very little cash normally, odds are I’m not going to remember to grab either as I’m walking out the door on Sunday morning. This means that it’s highly likely churches are going to see a hit to their passed offering income as fewer and fewer of the people in their pews have cash or checks on hand to put in the plate.
The downside of electronic giving to many churches is that it reduces the theological value of the offering as part of their liturgy. But the downside to not using electronic giving may be significant losses in potential income. Likewise, for many nonprofits whose primary fundraising occurs through events, electronic giving might not seem like an obvious fit, but it may facilitate a substantial increase in donations. As more and more options emerge for deploying mobile giving through apps, text messages, or tweets and using portable card readers or kiosks for in-person transactions, electronic giving doesn’t have to just mean a donation button online. In fact, electronic giving can be incorporated direclty into the normal rhythm of passed offerings and event-based fundraising that churches and nonprofits have traditionally relied on alongside cash and check donations.
There Are a Lot of Options for Who to Work With
When we talk about electronic payments and donations, most people’s minds immediatly jump to PayPal. The iconic company was certainly a pioneer in the field, and has done a lot to define the industry. However, they are hardly the only player. As Business Insider notes about all of the trends we have discussed:
At the heart of these changes in how we pay are thousands of companies competing and collaborating to facilitate transactions.
With so many options, how can you choose?
To start, here are three helpful avenues you might pursue for your church or nonprofit.
First, find out what if any solutions your current financial partners offer. If you bank with Chase, for example, they offer several electronic payments solutions that will easily integrate directly into your bank accounts, making for a convenient way to get started.
Second, look for solutions that dovetail with how your organization operates. If your nonprofit solicits donations through a newsletter, a valuable feature for you might be text-based giving, allowing you to include a simple phone number donors can text a simple message to iniating their transaction. If you have a strong social media presence, solutions that incorporate social giving may prove especially valuable. And if you are a more in-person focused organization, looking for a kiosk or portable card-reader option may be your best bet.
Third, evaluate the price of the service you are considering. Most of the time, to accept electronic payments you are going to need two components: a merchant account (sort of like a bank account, but primarily for holding and processing the funds you are receiving before they get transferred to your real bank account), and a “payment gateway,” the software that actually processes the payments. Sometimes those come as a package deal, other times they are priced separately. Some systems use per-transaction pricing, others use a fixed monthly fee, still others use a hybrid model of both transaction fees and monthly service fees. Run the math on some possible scenarios that fit your usual giving patterns to find out what pricing models make the most sense for your organization. If you are using a service provided by your bank or other financial institution, you should find out if you get a discount for already being a customer. There are also often nonprofit discounts you can take advantage of.
We at Soren also recommend that you take a look at the services offered by our colleagues at ContinueToGive (affiliate link). ContinueToGive specializes in providing electronic payments technology to churches and nonprofits, and their offerings are tailored to meet a variety of common use cases for both. For example, they include options for text-giving, social giving, online donations, and kiosk-based giving all by default. We also appreciate that, by leveraging the different costs involved in different types of financial transactions (credit, debit, and ACH, for example), they are able to offer lower rates to their nonprofit customers than many of their big-name competitors.
No matter how you approach it, electronic payments technology is changing the way we transfer money, both for commercial and non-comercial reasons. As the industry continues to diversify, a lot of new options and opportunities will continue to emerge for churches and nonprofits to take use this technology to help them facilitate the important work and ministries they engage in daily. At Soren, we are here to help you use technology as effectively as possisble. Please feel free to reach out to us with questions or to get help implementing electronic giving in your organization!