How to avoid Paypal fees for 501c Nonprofit Organizations like Pools

How to avoid Paypal fees for 501c Nonprofit Organizations like Pools
May 24, 2018 Justin at PoolDues

How to avoid Paypal fees for 501c Nonprofit Organizations like Pools

The short answer is: you can’t. You can’t make every transaction a friend to friend exchange. If you try you’ll quickly run into the limits of what amounts can be received that way. Just receiving the exact same amounts over and over again raises a flag with Paypal. They aren’t dumb. “Oh twenty of your friends just happen to Paypal you $9.99?  It looks like you’re selling goods here.”

And no, you can’t use Venmo either. Paypal owns Venmo by the way. They didn’t buy Venmo to make their core revenue stream obsolete. What works for splitting the cost of a 12-pack doesn’t work for an organization pulling in 75k or more a year.

Running a business nowadays requires accepting a couple things.

1) People want to pay by credit card. It’s convenient and sometimes buyers simply don’t have the funds available to pay by check.

2) There’s going to be cost to accepting credit card payments. No matter where you go, how you receive it, if it’s coming from a credit card, the fees are going to be about the same. There’s really just 4 card issuers out there, Visa, MasterCard, Discover and AmEx, and they are the ones charging the bulk of the fees (between 1 and 3 percent). So while sites like Paypal are taking a little cut off the top for themselves, those charges are still originating from the card issuers.

So no matter how much you beg and plead, “We’re a 501c organization, we’re in this for the good of the community”, they could care less.

Gee, is there any good news? Yes. Paypal’s base rate is a 2.9% charge on funds received through them, but the more business you do with Paypal, the less that rate is. So in a month where you received $10,000 or more, that rate drops down to 2.2%.

Even better news. If you use PoolDues, we can just pass that amount onto your members as a line item at Checkout labeled whatever you want. For example “Tax or Fees”. And by the way, PoolDues takes ZERO per transaction. Member payments go directly into your Paypal account

If you decide to pass on the fees to your members, obviously that adds on a % to their final cost. On a $550 Membership, this is about $15 more they will see added. Most buyers ignore this charge IF it looks like tax. If it looks like a service fee (which it is), most people understand they are paying for the convenience of buying their membership online. And unlike the credit card companies, your members DO understand you are a non-profit organization and naturally give you a little more leeway than say, L.A. Fitness trying to pass off those fees to customers.

And remember too, you can always tell people they can still pay by check. You can put the address to send a check to right below all your online payment options, and believe me, it wont discourage most people from paying online.

Here’s what we would recommend (and obviously your PoolDues payment portal can set it up this way)….

Include the Paypal fees on One-Time Yearly payments, but make them exempt from Yearly Recurring Payments. So this way you push members toward the automatic payment cycle. And yes, you’ll be out the $15, but you’re guaranteed to get paid the next year, and year after that and so on (assuming the member doesn’t cancel).

You could even email members and tell them, “if you setup a recurring payment before March 1, it will be exempt from fees”. This way you’re getting member dues in February instead of the week before Memorial Day.

And your treasurer or other shop admin can easily toggle on or off adding those fees (on a per product basis).

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