 Welcome to Nonprofit Payment Processing for Nonprofits. My name is Becky Wiegand, and I'm the Webinar Program Manager here at TechSoup. I've been with the organization for 7 years, and I'm happy to be your host for today. Also joining us on the line is our expert today, Nick Bencevenga, who is the COO at Dharma Merchant Services. He holds a degree in economics and international studies from Virginia Tech, and he worked in the financial services industry prior to joining Dharma in 2011. He enjoys biking and rock climbing with his wife and their dog, Hubert, and he's a wholehearted supporter of the paleo lifestyle. And we're really happy to have him joining us because he is an advocate of Dharma's mission, which is to enhance their collective situation by operating with compassion, care, kindness, and moral responsibility in every aspect of life. And he brings that to his business life at Dharma Merchant Services. You'll also see on the back end, Sun Park and Ali Bestikian who are joining us from TechSoup. They'll be on hand to help answer questions and help you with any technical issues throughout. We are all here in San Francisco, us in our San Francisco Headquarters office here at TechSoup, and Nick in the offices of Dharma Merchant Services. Go ahead and let us know in the chat window where you're joining from today. While you do that, I'll also go ahead and look through today's agenda. But we have folks chiming in, Santa Barbara, Colorado, D.C., Connecticut, Utah, Florida, Texas, North Dakota, Virginia, all over the country. We also have some folks joining us from around the world, Canada mentioned. We're glad to have you all joining us today. Thanks for being with us. Today's webinar will focus primarily on topics and products that are available in the United States, but some of the products are also available around the world. I'll do a quick introduction of what TechSoup is in case you're not familiar with us. And then we'll ask you, our participants, a couple of questions about how do you need to process credit cards and what your level of comfort is in doing so already. Then Nick will take us through how to understand the transaction process and the different players that involved, giving us some good definitions because there's a lot of jargon and lingo out there that trips us up and confuses us and makes choosing the right vendor for your organization's needs more complicated than it needs to be. Then he'll talk about how credit card processing works and how to avoid some common traps that end up costing your organization more money. We'll talk about how to accept different kinds of payments, both online, in person, with the card in your hand, point of sale systems, and smartphone options. And then I'll go ahead and highlight a few featured credit card processing providers that are available through TechSoup's programs. We'll have time for Q&A, so ask questions as they come to you because we'll be flagging them throughout the webinar. So TechSoup Global is a network of 63 NGOs around the world serving nonprofits, public libraries, foundations, and charities in more than 120 countries. You can see more about the work that we do in our 2014 year in review. We serve these countries all around the world, so anywhere you see a dot on this map we have a presence. And some of those dots, green ones in particular, are net squared groups. I'd like to highlight them because those are the local chapters you can reach out to, to join a meetup in your area, to talk to other nonprofits and social do-gooders about how they use technology. We serve these organizations 615,000 of them around the world and have delivered donated technology products to the tune of nearly $5 billion. And prior to joining TechSoup, I was a recipient of many of those donations at three small nonprofits that I worked with. So you can learn more about those programs at TechSoup.org. Now onto the topic of the day. Go ahead and weigh in on this screen. Let us know clicking one of those radio buttons on your screen. How familiar are you already with Merchant Services? Do you currently accept credit cards? And feel like you know a lot about how to select the right kind. You are pretty confident in how you do it. You have tools that work pretty well for you. Maybe you accept credit cards but you don't know a lot about it or you are not sure if you are using the right tool makeup. Maybe you are limited in the ways you can accept credit cards. Maybe you don't accept credit cards yet but want to. And you are not sure where to begin. Go ahead and comment in the chat if there is something else that you would like to share that is not represented on the screen. Brock, comment in the chat. We take donations and credit cards via PayPal. Sandy comments, we have handled credit card processing by our third party with online payments. Ken comments tried it once but fees are too high. That is not an uncommon feeling especially depending on the types of transactions and volume of transactions you are processing. We know you can't see what others are commenting so we will try to chat out anything that is useful. We will try to share that back out with you. Otherwise we are reading your comments and capturing your questions on the back end so know that we are watching. I am going to go ahead and show the results and then have one other question and this helps inform us of where you are at in the process and also how we can best help you in today's webinar. So it looks like 50% of you accept credit cards but you are not sure that it is the right fit. And combined, let's see my math skills right here, about 30% of you either don't accept cards yet or you are just not sure where to begin. So that is great to know and have an idea of how our audience is feeling about credit card processing right now. And go ahead and click on these buttons. You can select as many as apply to you. How are you most interested in accepting credit card processing and payments? Are you mostly looking to have online sales or donations? Are you doing phone and mail order sales or donations? Are you needing to accept credit card processing in person either at your offices or if you are a library maybe at your circulation desk for late fees or maybe at your church if you are joining us from a religious organization or church? Are you needing smartphone and mobile sale or donation options? And maybe all of these apply to you but go ahead and click them all if that is the case. And if there is something else, again comment in the chat. I will give just another few seconds. Right now we have about 155 people in the room weighing in so we want to make sure everyone has the opportunity to share their feelings. Amy comments, we need credit card services that can handle donations, products provided for donation as well as online video pay per view in a one-stop shop. So some of you need more robust systems to be able to handle that or have e-commerce. Some of you sell things in addition to providing services where you may get donations. I imagine some of you have membership fees. So lots of different ways you may need to process payments. I will show the results here. And by far the largest group is the ability to collect credit cards through online sales or donations followed by in-person credit card transactions either at your events or your offices. That is really helpful to know but a lot of demand for all of these so that is great. So I would like to go ahead and have us dive into the topic at hand with Nick Ventavanga, the CEO of Dharma Merchant Services who is going to talk to us a little bit about how all of this stuff works, help define things, help take away some of the scary lingo that makes it complicated and talk a little bit about the pricing and different models of pricing that are out there that you can select from. And before having him actually join us on the line I just want to make sure people understand that there is no one size fits all when it comes to payment processing because if you are a small organization that processes $105 donations in a month that is going to be a different system that may work best for you compared to a larger organization that processes 1,000 donations or 10,000 or 20,000 donations in a month or maybe you only process $2,000, $5,000 donations a month. And those differences in the way that you manage and receive transactions make a big difference in how you select your tools. So Nick is going to explain a little bit more about that. We are so glad to have you on the program Nick. Thanks for joining us today. Nick Ventavanga Thanks so much Becky. I really appreciate it and I'm happy to be here and help out. So as a quick introduction as Becky mentioned I've been working at Dharma Merchant Services for about four years now and I'm the COO. And we are a relatively small firm here so I get to have my hands in a lot of different parts of our business. And we specialize mainly in nonprofits. That being said we have a social mission towards giving back to our community. So we often end up working with a lot of socially-month-conscious businesses, socially-responsible firms as well as nonprofits. About 40% of our portfolio is made up of nonprofits in particular so we are quite sensitive to their needs. But I wanted to jump in and first off give a background of what a merchant account even is, why you might need one, and define a couple of key terms. And then discuss some pricing models and how things work in our industry and how pricing works in general. And then we can discuss hardware and get into some of your specific questions as well. I see a lot of great questions coming up, a lot around PayPal which we'll definitely dive into. And as Becky mentioned one thing to really keep in mind is merchant services is a really customizable solution. Meaning everybody is a little bit different and has different needs. And as Becky alluded to not every solution is going to be kind of an out-of-the-box fit for every merchant because we all have different needs when it comes to accepting payments. With that in mind I'll go over the basics. Please feel free to interject with some questions and we'll flag them on our sides that we can address them at the end. So to start out we want to define a merchant account. Most people don't even know what this is. A merchant account is simply a business bank account that allows your organization to accept credit card payments. Most merchants aren't aware but accepting credit cards carries risk. Just like accepting cash or checks you could accept a counterfeit bill, your safe could get rated at night, a check could bounce. Same idea credit cards actually do carry a risk. And one of the jobs of the merchant service provider is to manage that risk and then pay you for the funds. So risks that can happen are your customers might dispute a charge, there might be fraud on your account, things of that nature that a merchant service provider is actually responsible for. Should your organization not be able to pay, we're on the hook. And so that's one of the things that you're paying for with a merchant account. You're also paying for the provider to ensure that you're up to date with the IRS. We're required by law to report back income. We're required by Visa and MasterCard to make sure that your account abides by all sorts of different regulations and standards. And that's one of the jobs of the merchant service provider. In addition we're going to be responsible for physically putting the funds into your bank account, helping out with discrepancies, things of that nature, all sorts of customer support. So your merchant service provider is really the company that manages your payments and ensures that you're getting paid on time. So as we discuss a kind of a main transaction flow, just to kind of get the basics of how a credit card transaction works, there's four main players. The first two players are the ones that everybody thinks about, the merchant and the customer. You as your organization are the merchant if you are accepting payments, and the customer is the person making the payment, or the organization making the payment. Behind that there are two banks, one bank for the customer and one bank for the merchant. Whatever credit card or debit card the customer is using, that will have been issued by a card issuing bank, think Chase or Bank of America, Wells Fargo. If you pull out a credit card out of your wallet it's going to have a logo on there. That's the card issuing bank that made the credit card. The merchant service provider is also known as an acquiring bank. This is going to be the bank that represents you, the merchant. So everybody has got a bank behind them. I'm not going to go through this entire transaction flow, but we can keep it up on the slide so that you can see it later. But in a nutshell, the transaction is going to go through each, every bank is going to get touched as the transaction happens. When I have authorization we'll get sent to the issuing bank. The issuing bank says yes or no, comes back to the credit card terminal or online, and then it gets sent to the acquiring bank to process. So as we move forward we can go through a couple of quick definitions around what these terms mean. So again the customer is going to be whoever is actually making the payment, whereas the merchant is going to be who is taking the payment. And the card issuing bank represents the customer and the merchant service provider represents the merchant. The last term that a lot of people hear around is called an ISO or an independent sales organization. You can consider an ISO one in the same as a merchant service provider. They're oftentimes considered an agent on the account. For many, many years, many big banks such as many merchant service providers simply haven't wanted to get into the business of acquiring merchants. They're really good at processing payments, but they're not great at necessarily at customer support or finding merchants. So oftentimes they will essentially rent out this solution to a smaller company to go acquire merchants and be front-end support, and that's known as an ISO. So this is very common to hear in the industry. And ISOs can actually be a really big boon to certain niche markets. For example, in the nonprofit world. Bank of America might not have a great relationship with many of the smaller nonprofits in their community, but they might have a local agent who really knows all the different organizations, all the different people in that community, and that agent or ISO could be in a much better position to represent these companies or these organizations. So an ISO can actually help out in knowing what kind of needs each organization has, and more adequately finding a perfect solution for them. And I see that somebody did ask a question. Dharma is an ISO. We are technically an ISO. Most merchant service providers that you hear about there are actually ISOs. They represent a larger bank. The ones that aren't going to be an ISO are the really big ones. Bank of America, Wells Fargo, the city, kind of the really large banks. They are direct processors. Most other processors will be ISOs. So as we move on, we can talk about, now that we've defined a merchant account, many people ask, what's a payment gateway, or what could that be? And a payment gateway is essentially think of a payment gateway like a credit card terminal for the Internet. So if you accept credit cards in person, you're going to swipe a credit card to the terminal. Immediately the terminal will dial out for a live authorization, ask the card issuing bank, hey, is this a good sale or not? And the card issuing bank will come back with a yes or a no. The terminal, if it got a yes, will say, great, the SQL print and your customer will walk away and you've got a donation. In an online environment, there is no phone line. We have all this transaction information, credit card information, that's being entered on the Internet. And as such, we've got to get that information to the card issuing bank in an encrypted and secure format. And that's where a payment gateway comes along. A payment gateway's job is simply to take all this information that's been entered by your customer, pass it along to the card issuing bank in a secure manner, and come back with a yes or a no. That's the core job of a payment gateway. Payment gateways can come in all shapes and forms. Technically PayPal is both a payment gateway and a merchant service provider. They've combined both of those services. However, most merchant service providers will offer their merchant services as one product and a gateway as another simply because many merchants will have specific needs when it comes to gateways. As you can see, I said, do I need one? And that really depends. Every merchant's, or every organization will have different needs. Some organizations, I see almost everybody here said I need to be able to take online donations in some way, shape, or form. If that's the case, likely you're going to need a payment gateway. But some organizations might only have very basic needs. A quick donate now button on their website, whereas other organizations might need to integrate with a shopping cart or allow customers to save information and come back and pull up orders. Those advanced features can be part of specific payment gateways and your organization might need some over others. So I do see a question asked about PayPal as well. PayPal is independent from every other provider. So you can consider PayPal like their own merchant services company. You can have PayPal and another provider, but only PayPal can process as PayPal. All right, so just quickly looking at how a transaction flow works on a payment gateway. If we look at this first box here, you can see a customer is going to place an order on their website. Immediately that site is going to, your website will take that information. And if it's connected with a payment gateway, it will go into the payment gateway. The payment gateway will send this information live through the Internet, get a yes or a no, and come back and report that information directly to the customer. They're either going to get a yes or a no in real time. If it's a yes, the transaction will process and the funds will fall out of their account and into yours. So moving forward, a lot of people are going to ask, well, why do I need this? I've got PayPal. It does both. Why would I want a payment gateway separate from a merchant account? And the answer is flexibility. Many merchants start out with PayPal because it's simple and easy and it works great. But oftentimes, as I've seen a few questions alluded to, PayPal will be missing a feature. Some merchants I see here, somebody asked, why can't I key in transactions in PayPal? That's a feature that they don't include with one of their basic accounts. Other things that people may want in a payment gateway might be recurring donations. If you want to be able to take a credit card from your customer and your donor and say, oh, let's charge a donation of $25 every month, many payment gateways will allow you to input that information, say set this for once a month and walk away, set it and forget it. So you're going to automatically take that payment every month. That's an advanced feature that's only offered by certain payment gateways. And if you're a smaller organization, you might not have a need for that yet. And so paying for an additional feature like that wouldn't be worth your while. And so that's why you can see how many companies can specialize in very specific needs for specific industries. And that's why organizations will opt for different gateways based on their needs. There can be very complex ones all the way down to very simple ones. And depending on your needs, prices are going to fluctuate. The last big reason to choose a gateway that isn't connected to your merchant service provider is actually a big one that most people don't consider. And I'll give a hypothetical situation. Let's pretend that I started working with company XYZ. And they said, oh, you can use our gateway. I said, great, it's all connected. It's all one. This sounds wonderful. And over the next three years, we've been keeping all of our customers' data in this gateway. We've been storing credit card numbers. And we've got all of our goodies in this gateway and we feel really good about it. But then we find out that this merchant services company has been ripping us off. And they've been overcharging us by 3% every month. If I want to take that data to another provider, I can't. This merchant service provider, because it was a proprietary gateway, now owns this gateway. So I can't take my data with me. That means that I'm either stuck paying their high fees or losing all of my data. And for that one main reason, many merchants will proactively choose, I want a gateway that doesn't lock me in. I want to be able to have an agnostic gateway that I can take to different providers. And most of the bigger gateways out there are set up like that. And so that's why many merchants opt to not utilize an internal gateway because you're basically stuck with them many times. So moving forward, we're going to discuss credit card pricing which can be very complicated because there's a litany of different pricing models out there. And most of them are dependent on some very confusing underlying terms and different kinds of fees that people aren't aware of. So what I want to do is just briefly touch on a couple of the main components of how credit card pricing works, and then discuss a couple of key and primary models that you can look out for, things to avoid, and things to ask. So the main components of every credit card transaction are going to be known as interchange rates, card association fees, and your merchant service provider's margins. Typically, the largest piece is going to be interchange. And in a nutshell, interchange is the underlying cost of any given credit card transaction. If you pull your wallet out right now and pull three different credit cards out, most likely those three credit cards will have three different interchange rates associated with them. And what that means is the interchange rate is what the merchant service provider is going to pay back to the card issuing bank the moment the credit card is used. So for a quick example, let's pretend an interchange rate is 2% and your customer donates $100. The moment that they run that $100 sale, the interchange rate of 2% will be assessed. 2% of $100 is $2. So your merchant service provider would immediately pay the card issuing bank to that customer $2 as their fee. So that's the base cost. Your merchant service provider is paying that in advance. That's going to happen on every single sale, and the interchange rate will depend on the actual type of card being used. And the idea here is that interchange rates adequately reflect the actual cost of processing. For example, if your card issuing bank issues you a card with rewards, or points, or miles, it's going to cost them money to give you those things. And as such, that card will have a higher interchange rate associated with it. Whereas debit card doesn't have really much risk or cost associated with it, because as soon as you use it, the money is in your account and we can just pull it right back out. So there's very little risk and very little cost, so therefore the interchange rate is much lower. There are literally hundreds of interchange rates out there that depend on many factors, but the end of the day thing to take away from that is that interchange is set. You are not able to change an interchange rate. Once you receive a card, that's the rate. That's what everybody pays. It's like the invoice cost of a sale for us. The next section is card association fees. And card associations are simply Visa, NASA card, Discover, and American Express. Most people think that the fees you pay go back to them, but it's actually only a very small section of the fees will go back to the card associations. I'll get into it in a little bit here, but it's typically around .12% of the volume you process will go back to Visa and NASA card. The last section is what you pay to your merchant service provider like Dharma or your bank or whoever is actually processing your credit cards. And your merchant service provider is going to charge you for customer support for actual risk processing these cards. There are times when your merchant service provider will take losses. They are going to have margins for the equipment that they provide you. And for any other ancillary products that you might purchase, there's a lot of different things in payment processing such as gift cards, check acceptance, things of that nature that your merchant service provider is typically responsible for. So to dive in a little bit deeper on interchange, because interchange is actually the biggest section of the cost. If you were to take your $1,000 monthly bill and look at it, typically interchange will be the $800 of $2,000. It's the bigger chunk or the largest section of your merchant services fees. Interchange is always, always set in stone. And interchange is always, always something you cannot change. So it's important to recognize that interchange is something you can't even exactly estimate because you don't know what kind of cards your customers are going to use. So it can be a little bit challenging to work with interchange because you might be asking yourself, if I don't know what the rates are, how am I supposed to accommodate for this? And we'll discuss this in a few pricing models here, but typically the best pricing models are one that disclose this interchange rate. Interchange, think of it as synonymous with your provider's cost. It's what your provider is paying back for sales that you process. So interchange, basically you're always going to pay at least that plus some margin. It's the base cost of all credit card sales. And it's the cost that every provider has. So let's move on, and we'll talk about the card association fees real quickly. Again, these are fees that every provider is subject to. They're set by Visa, MasterCard, Discover, and American Express. And there are many different instances where a card association fee can apply. But the general amount is typically it's roughly 0.12% of the transaction volume and roughly $0.02 of transaction. Again, these fees go directly back to the card associations, and it's where they're making their cut. This is how Visa stays in business. This is how MasterCard stays in business. They're taking a small percentage of every sale. And the last one, we're going to go into pricing them of a merchant service provider. And first I want to discuss even why would you choose a full service merchant service provider as opposed to something like PayPal or Square? And the answer is you might not want to choose a full service merchant service provider. There are plenty of organizations where you're not going to get the benefit of what an MSP can provide. And you probably will overpay should you use an MSP. Most merchant service providers will do better with organizations processing consistent volume of at least $5,000 to $10,000 per month. And the reason is when you're hiring an MSP, you're hiring somebody to manage this process for you or to help you out. You're hiring customer support. You're hiring somebody who will pick up the phone when you call. You're hiring somebody to actually consult with you and manage this process and determine what the best solution is for your organization. PayPal is never going to do that for you. Square is never going to do that for you. And by design, they don't want to and they shouldn't. So a full service MSP is perfect for customers or for merchants who need assistance, who have complicated models, who are taking donations or payments across many different channels and want somebody to help consolidate, keep these low, and ensure that they're doing things the right way. So as we discussed, is an MSP even good for me? Let's talk about why would I even choose PayPal. PayPal is perfect if you're just getting started or if you're taking smaller volumes every month because of the simplicity. To be perfectly frank, having a merchant account can have some confusion. There's a lot to go on. It's a financial services firm that you're dealing with. And so as such, there's just more happening. And that doesn't sound a bad thing, but it can be really nice for a new organization or an organization with limited needs to just have things simple. PayPal makes it so easy to sign up. It makes it so easy to put a button on your website. And frankly, it makes it easy to estimate your pricing too. They have a flat pricing model which makes it very simple. You sacrifice some advanced features, but it's definitely worthwhile for merchants who don't know exactly what their processing will be every month, who don't know how big they're going to get, or who just need something basic to accept donations today right now without having to worry about things. PayPal is perfect. We don't even consider ourselves a direct competitor of PayPal because typically they work best for merchants who are doing under $10,000 per month. And we work best with merchants above that. So we've found that it's not even a competition for us. It's actually that this is a good service for merchants doing smaller volumes. And I see that somebody just asked a question at what level of monetary intake is it a bad idea. It's really challenging today to be perfectly frank. And the reason is every organization is different. Every organization takes different kinds of cards. And PayPal even is willing to offer different rates at different levels so it's possible that PayPal has given them a price break at a certain value. Typically, and I say typically, what we've found is usually in the $5,000 to $10,000 per month and above range. A full service merchant service provider will do better than PayPal. That's not always the case though. And if you're wondering, we'd be more than happy to do a full review for you. So now that we've discussed, do I even need one? How do the margins work on merchant service providers? Now that I know I've decided, okay, my organization is big enough or I've got enough different channels, what should I be doing here? How do I choose a pricing model? And the pricing models in merchant services can be very, very confusing. There's two main pricing models that we'll discuss today. Frankly, pricing can be done in many different fashions, but these are the most common ones that you'll see. Because we've discussed interchange fees here, we'll talk first about the tiered pricing model and how that works. So as we discussed, interchange fees are variable. They can be very low from close to 0% up to as high as 3% for transaction, but they're going to fluctuate. Most cards are in the 1-2% range. A tiered pricing model works whereby your provider will say, don't even worry about those interchange fees. We're not going to show them to you. Instead, we're going to give you this rate. Let's say 1.99%. And it sounds very nice. Okay, 1.99%, I can deal with that. That sounds good. But then what often isn't disclosed is what's called a non-qualified rate. So the provider will lead with this low rate and say, hey, your qualified sales will be 1.99%, but then there will be a hidden non-qualified rate that is typically much higher, 3.5%, 4%. And what your provider won't tell you is what kind of transactions will kind of qualify versus what won't qualify. That's going to be for you to guess. And oftentimes, you'll get a statement in the mail and you'll say, boy, looks like all of my transactions are 90% of them. We're in this non-qualified bucket of 3.5% instead of this qualified rate of 1.99%. The problem with this model isn't necessarily that you'll pay more money. Your provider could set this up in a way that's very cost advantageous. The problem is, you'll never know. It's impossible to know what your provider's margins are on a tiered pricing model because they're not sharing their costs with you. So for all you know, they're making a tenth of a percent. They're making 1%, they're making 5%. You really can't know because they're not telling you what their costs are. So a tiered pricing model can be okay if you're getting great low rates. It's just hard to know, which is why we actually advocate for an interchange plus pricing model across the board for any merchant. The way an interchange plus pricing model works is instead of giving you an arbitrary rate, your provider will say, we're going to add a specific margin on top of each interchange fee. So let's pretend that the margin is 0.2%. If the interchange rate is 2%, they're going to add 0.2 and you as the merchant will pay a total of 2.2%. The advantage to this model is your provider will always be disclosing their margins. You're going to know that on every single sale there will be 0.2% in margin. You're going to be able to see this on your statement and you'll be able to take that statement to another provider and say, can you beat this? It allows you to ensure that your provider is transparent. It allows you to ensure that your provider isn't raising rates. And it also makes it so that you can compare services to other providers. An interchange plus pricing model is something that is widely demanded by large volume merchants. If you talk to any merchant processing above $100,000 a month, I can almost guarantee that they're going to be on an interchange plus pricing model. And the reason is, high volume merchants know that they deserve it. They know that providers are willing to give it to them and they demand transparency. And we're of the opinion that all merchants deserve that. And we know that but because of the proliferation of the Internet and the amount of knowledge being spread around right now, almost every provider is willing to provide interchange plus pricing. They might not lead with it. They might not tell you about it, but if you ask, most of them will provide it. And here I'll just show a quick example of some of these cured rates. You can see here's how the service will lead. 1.99% or 1.38% and then the statement will look like this, non-qualified, 3.47%. There will be a whole line item in there where all of a sudden your transactions aren't qualifying at 1.99 but at 3.47. And that can be, this is a common trick in our industry unfortunately. In addition to cured pricing or fixed rate programs, there's a lot of other things to look out for. And frankly I could spend an hour just talking about fees, but the big ones are going to be hidden fees. Always read your contract. Look for anything where it says we're going to charge you $100 for this or $100 for that. You'd be surprised at how many things can be written into a contract in small print. Monthly minimums can be a real killer for nonprofits especially if you're seasonal. Many merchant service providers will say we're going to charge $100 per month if you don't process X amount of volume. You might not even notice for a few months if you were a seasonal merchant. So you could be processing $50,000 a month for 3 months. Everything's going great. And in the first month you don't have sales. All of a sudden you just got billed $100 for not processing. Unfortunately common in our industry. Same idea with cancellation charges. The cancellation charges are often to the tune of you can cancel your account if you pay us $1,000, or you can cancel your account if we calculate our profit for the next year and you pay us our profit. This is again unfortunately common in our industry and we highly recommend asking your sales representative any new merchant service provider. Am I walking into a contract? And if the answer is yes, we highly recommend looking around because there's really no reason for it. Another big trap is equipment leases. Typically equipment should not be very expensive in our industry and many times merchants will get locked into a 4 or a 5 year contract where you're paying $30, $40 a month for equipment. Oftentimes you can do the math on this. You'll end up paying $1,500 or $2,000 for a piece of equipment that might have only originally cost $3 or $400. We always recommend purchasing your equipment up front and always ask if their equipment is locked because some providers will even sell you equipment that won't work at another provider. So you're stuck with them if you want to keep using your terminal. You'll also see out of compliance scams where merchant service providers will just cold call merchants and say, hey, your account isn't in compliance anymore. Just sign right here and it will be. We get these calls regularly from our merchants saying, hey, did you guys call us? No, no, no, that was a scam. Unfortunately it happens regularly. So always be on the lookout if you get a phone call from somebody pretending or purporting to be your merchant service provider and ensure that they actually are by verifying details. The last thing is surcharge assessments. This is a really big one too. We just talked about card association fees and those are incredibly vague and they can make per instance fees. Unfortunately this is an opportunity for many providers to just mark things up. They say, oh great, nobody knows. Might as well just do it. So always read your contracts. And one thing that's important in discussing nonprofits and interchange as well is interchange in particular is designed to help nonprofits. Nonprofits get lower interchange rates than everybody else. As such, you will always benefit from an interchange plus pricing model because if you're receiving lower interchange rates and you're on interchange plus, that means that you're receiving lower fees as well. Sometimes it's up to a percentage point lower so we always recommend it. So we're going a little bit behind time so I want to speed up a tiny bit to make sure we get to everything. I want to discuss online payments. I went too far. I'm sorry. So as we discussed earlier, there's two major options when going online. You have something integrated, something that's built for you like PayPal. Simply build a button and put it on your website. The advantages to this are obvious. It's easy, it's simple, it doesn't take long to do. The disadvantages are just as obvious. It's not customizable. You don't get to have recurring payments. You don't get to have your own buttons, your own logos, anything like that. It can be very basic. And for some customers it can feel like a turn off. So what many merchants do instead is develop a custom solution. And this is where a payment gateway comes in play. You'll need to have a payment gateway if you want to have custom donation forms, custom payment pages on your website. And typically you're going to need to also have some sort of development team either in-house or you're going to need to hire somebody. The reason being is every merchant has a unique solution. Every merchant is going to want to have different questions. Their page is going to look different than another merchant's. They're going to want to have different logos. They're going to want their data to be stored differently. And as such, every merchant is unique. And so we want to make sure that you're finding a solution that meets your specific needs. And that's why an out-of-the-box usually won't do it when you get to a certain level which is why we recommend working with an outside web development provider. We offer a few in-house here and there are plenty out there as well. And we can discuss those at the end. Usually the costs are you have roughly $15 to $20 per month in a merchant account and usually $15 to $20 per month in a payment gateway. Naturally these fees can fluctuate based on a deal that you are able to get. But we usually recommend to estimate about $30 to $40 per month in static fees. And then online payments for a nonprofit typically come in at the range of about 2.5 to 3%. Again, this is very variable, but that's a good range. It can go as high as 3.5. It can go under 2, usually around 2.5 to 3. Oftentimes if you're going to do a custom solution, you're going to have to purchase additional services, a shopping cart, a web development team, something of that nature. So we've got a couple of – we work with ForAGoodCause.com. They create a custom website, custom donation pages for merchants so that it kind of takes it out of your hands. But there are a lot of them out there which I'm sure Becky can discuss at the end as well. So I know a lot of you wanted to talk about in-person payments as well. And in-person payments are in our industry considered the lowest risk and the cheapest kinds of payments to process because you're getting a signature at the time of sale. You're swiping the card and verifying the information. From your perspective it's typically the cheapest sale to process as well because it doesn't require an online payment gateway. And usually you can process through a credit card terminal that you already own or have paid off. Most terminals are cheap, a couple hundred dollars, and many organizations will either give them away or will allow you to purchase them at reduced prices if you're a nonprofit. Wireless terminals will work very similarly to in-person standalone terminals outside of the fact that you'll typically pay a wireless fee as well. The reason for that is wireless terminals utilize the cellular networks. And just like you have to have a SIM card in your phone, you'll have to have a SIM card in your wireless terminal as well. And so those will have an additional monthly fee for that and the additional cost of the battery and things of that nature make those terminals a bit more expensive. They're usually in the $500 to $800 range. And moving on along for in-person sales we've had a lot of questions about do I need a point of sale system? And what is a point of sale system? A point of sale system is if you think about when you walk into a restaurant or a retail establishment it's usually the computer or the tablet that sits behind the register that manages all of the business. It manages the finances. It'll manage inventory, employee time clocks, reporting, all things of that nature. So a point of sale is kind of like your dedicated front-end device if you're a retail merchant. Perfect for retailers. Nonprofits, however, typically won't get too much advantage out of this or benefit because usually nonprofits don't have big inventories, usually don't have a ton of employees, and usually your sales are pretty basic. So not to say that a point of sale can never apply, but typically most nonprofits won't need to utilize one. So moving on along to smartphone processing. And this is something that most nonprofits have a need for. And I feel a lot of people said that they're interested in this. And smartphone processing actually utilizes a payment gateway in the background. Most people don't recognize that, but because the transaction is technically happening over the Internet it's utilizing a payment gateway. And so that payment gateway oftentimes already exists. So if you already purchased the gateway, if you already have Authorize.net for your online sales, you actually already have access to a smartphone processing. Most payment gateways that you purchase today will include that functionality because it's quite simple for them to develop. All it is is downloading an app on your phone that is essentially a web portal on your phone that will act just like the portal on your computer. So typically most Mercedes-Benz service providers will offer very discounted or very cheap readers similar to the Square readers. And if you already have a merchant account set up, smartphone processing is usually cheaper through your merchant service provider than Square if you already have a merchant account set up. And if you're processing at regular volumes. And the reason I say this is Square is perfect, perfect, perfect for small volume merchants that don't have regular amounts of processing. You're processing just a few thousand dollars a month. Square can be great. But if you already have a full service merchant account and you're already paying a monthly fee and you're already paying for a payment gateway, you might as well utilize that merchant account because the processing fees will almost certainly be lower than Square. So naturally this is another one of those conversations that's going to depend on each individual merchant. But Square is usually best for merchants doing under $5,000 in person unless you already have a merchant account for other reasons. And I see it's similar to Square. Intuit can definitely be similar to Square. It's a very similar idea. They have a card swiping device. I believe they're actually a little bit more expensive, but the same idea. For costs, you'll actually pay less as a per transaction fee. Usually it's in the 1.8 to 2.5% to be frank. Some nonprofits will pay as low as 1.5% due to those reduced interchange rates. It will depend on the kind of card you accept, but it's definitely cheaper to accept credit card scheme person rather than online. The interchange rates are more favorable. Most terminals are between $2,400 and the wireless ones are about double that between $5,800. As we alluded to earlier, POS systems are usually not ideal for nonprofits. They have large upfront fees, typically $1,000 to $1,500, and a fairly high monthly fee, $50 to $100. Then smartphone processing again, that's going to be something that's built-in to Authorize.net or built-in to USAE Pay or whatever your other gateway is. So typically, you will have already paid for this service, and if not, it will just be the extra cost of a gateway purchase. So I know we have a lot of information in there. I tried to get through a lot of it here, and I know I'm sure there's going to be a lot of questions, but I wanted to briefly kind of de-introduce myself here and just let you know what we do here at Dharma. We've been around here for about 8 years. We're located in the heart of San Francisco, and we process exclusively for, not exclusively, but we do process almost primarily for socially responsible and nonprofit businesses, and that's really where our mission is. We give back a significant portion of our proceeds to charity. Every year, we also offer discounted rates to tech-suit nonprofit merchants as well. You'll see reduced setup fees. You'll see some free equipment as well, reduced ongoing monthly fees, and reduced pricing. So Becky can post the pricing to that as well. Naturally, we know that we're not going to be perfect for every organization, just like PayPal and Square won't. So we really encourage you to reach out and allow us to consult with you. We will definitely point you in the right direction if we're not the ideal fit, and that's something that we built our business on, is trying to ensure that we are helping our customers make the right decisions, not sign every account. So in that light, I welcome anybody here to reach out to me personally. I'd be more than happy to discuss any kind of aspect of your payment processing. In the meantime here, though, I think we have some time left over, so Becky, should we jump into some questions? Great. Thank you so much for that, Nick. I know that was a lot of information, and I hope people are able to absorb it, and you will have those slides that have a lot of text on them for a reason, because we wanted to make sure you had those definitions and had those explanations, because it can be so confusing. Before we jump into more questions, I did want to highlight some featured payment processing products, and these are actually all available through TechSoup's programs. Dharma, which Nick was just talking about, Dharma Merchant Services offers discounts for their payment processing services. Sage Payment Processing is another one that has a similar type of setup. They're a merchant service provider, ISO type system that they can process payments for you. Pay Anywhere is this little swiper if you're looking for a card swiping service. I know Nick mentioned Square. There's a lot of different options out there now into it, as mentioned, as having a card swiping option. PayPal also has PayPal here. So if you're using a service already, you may have something already available to you if you need a mobile card swiper, but Pay Anywhere is one of those. If you need an online storefront, if you have e-commerce and you want to sell your tote bags with your logo on them, or stickers, or t-shirts, or what have you, Shopify is one option for you. CauseVox is primarily dedicated to cause-based organizations and helping them fundraise and raise money online with an online platform. Connect to Give is a mobile-based platform for taking online donations. So if you need mobile access and SMS and text messaging, donation processing, that's available to you. And then I highlighted a couple of these other ones here because one thing that's not mentioned so far in Nick's presentation is when we talk about online donation, there is that straight up easy-to-use, simple PayPal that may not have the features you want. And then there is also building out something custom with an MSP. But in the middle, there are other options that may already be in your repertoire of tools. If you use an online donation, or if you use a donor management tool like an e-tapestry, or donor perfect, or many of the hundreds of others out there, many of them have some built-in payment processing available. And they may already have a relationship with an authorized.net or a verisign. So look at the tools you are already using. You may have a customer relationship management tool, a CRM like Salesforce that may have an add-on that you can use that offers payment processing. Now it may not be the best rates for the right fit for the types of transactions you need. So you want to look at those rates even if you already have a tool at your disposal. But certainly look at what you're already paying for to make sure that there's not an option that's already there for you to use because it may be easier, simpler, cheaper to go with what's already in your pocket too. So those are some options. And then the last item on the list that I wanted to highlight quickly is for those of you that have a higher level of PCI compliance, and most of you we are all beholden to process credit card payments securely no matter what industry we're in. But certain industries have an additional burden to make sure that we're maintaining private records that we're maintaining or not holding on to credit card data or customer information and data where it just shouldn't be in our hands and kept where maybe we are allowed to process that payment. And then after that we're only supposed to see the last four digits of the card. If you're concerned about that definitely check out some security options like this Hacker Guardian from Komodo it's PCI compliance that helps you evaluate whether your credit card processing is actually meeting PCI compliance standards. We won't get into detail on that unless people have specific questions which I'm sure Nick could talk a little bit more about. But I wanted to highlight that there are tools out there to help you determine if you're meeting those standards and requirements so you don't get yourself or your organization or your customers or your staff into any legal trouble if that data is hacked into and credit card information gets into the wrong hands and you find that your donors are suddenly being fraudulently charged because they made a donation to your organization and some scammer out there managed to get their card in. So before we jump into other questions we have a whole bunch of resources here. They're not clickable on screen but they are in the slide deck that you got with a reminder or confirmation email. They will also get them later today. Everything from the upcoming EMV card chip that's coming out that is some of you asked about that and I'll ask you a little bit about that in a second Nick. Dharma Merchant Services has a huge knowledge base that talks about all this stuff that Nick went over today in more depth. If you have a specific area that you want more detail on that knowledge base has tons of resources to go into. And then TechSoup has a lot of resources that we've created, things that are for specific industries, specific needs. So if you're joining us from a church we have examples of how churches can go high tech with their collection plates. We have some payment processing and pictures which shows you kind of the actual process visually so that you can see what it really looks like to do this process. And then we have some comparisons of different tools that are out there, a few good methods for payment processing for credit cards, a few good point of sale systems, how to take mobile payments and different options that are out there. So lots of resources at your disposal here. Definitely check those out after. So now I'm going to dive into this big long list of questions. And the first is Jeanette asked about wondering about the chip and the new credit cards and how that affects us. And that's that EMV that we mentioned. So Nick, tell us a little bit about what's coming and what we need to know about that. You bet. And this is what we call a loaded topic in our industry because EMV is on everybody's tongues right now. So EMV stands for Euro Mastercard Visa. And it's a technology that's been around for about 15 years, pretty much everywhere else except for America. And it utilizes an RFID chip in the card to secure the transaction as opposed to the magnetic swipe or a stripe on the back of the card. It's far more difficult to copy a chip card and as such fraud is greatly reduced when using a chip card in an in-person environment. So I want to be clear here, chip cards will only affect your in-person sales only. There is zero implication for chip cards on your online sales or keyed-in sales. It just doesn't matter. However, starting in October all retailers are required and we use this word required in quotes, required to have EMV terminals. That being said, although you are technically required to be able to accept EMV cards coming October, we can tell you that the vast majority of card issuing banks have not issued chip cards yet. So what that means is that even though you're required to have a terminal in October, almost none of your customers will want to pay by chip card yet. So you're going to see that many providers are taking a very slow approach to this because although technically you are required to have it, there's not any massive reason or there's not going to be a huge penalty to not accepting it right away. The only actual liability you do need to be concerned about is what technically happens on October 1st is if you're using a credit card terminal that does not accept EMV cards, you will be technically on the hook or liable for fraudulent sales only if somebody pays with a fraudulent card that was copied from a chip card and you swiped it. What that means is that somebody would have to actually fraudulently copy a chip card, make it into a magnetic swipe card, hand it to you, you'd have to accept the sale, and then that customer would have to call in and declare that sale fraudulent. Then your organization would be on the hook for it. But if somebody hands you just a standard card that doesn't have a chip in it, nothing has changed. So we can discuss a lot about this and I could talk about an hour about it. But I highly recommend reading the EMV blog that Becky referenced on the follow-up slide. And know that although technically you do incur some liability starting in October, it's very minimal for most merchants. And we do recommend speaking directly to your MSP if you are already accepting credit cards about EMV. Great, thank you for that. So we have a couple of other questions in here. We have people asking for comparisons like PayPal versus Square. Do you have opinions on that? Or are there resources where people can do kind of direct comparisons? Which would be from products that are out there? Yeah, so actually on Dharma's website if you go to the Dharma Merchant Services Knowledge Base we discuss who's best for Square, who's best for PayPal. And we always encourage you to simply reach out to us if you're unsure. If you've kind of gone through the things and said, oh man, I just don't know, feel free to reach out and we'll point you in the right direction. Our goal is not to find any other merchant, anybody that reaches out to us. We want to find a solution that works for you. That being said, typically Square is going to work best for anybody who is processing in person. And they are really, really great for merchants processing under $5,000 a month. There's almost no cheaper solution. In addition, they're also perfect for merchants who have very small transaction amounts. If you do $3, $5, $10 sales oftentimes especially in person, Square will be just a far cheaper solution for you because Square has no per transaction fees. So imagine if you're paying $0.20 per transaction with your merchant service provider. On a $100 sale, that doesn't make a big difference. That's only 0.2%. But $0.20 on a dollar is 20% of your sale. So if you have to pay a per transaction fee and you're processing very low dollar volumes Square is often far, far, far more beneficial because they won't have that per transaction fee and you're essentially allowing Square to subsidize your small transactions. Great. And we had a comment from Silkwater's Moony in the chat saying, no mention of Pay Anywhere, they are cheaper than Square. I don't have the Pay Transaction details in front of me for the Pay Anywhere options but it sounds like it's definitely worth doing a comparison there as well and checking out again the options that are available because there are a lot out there. We have a bunch of other questions in the queue. Like Eugenie asked, with the purchase of equipment, what's the obsolescence time frame? So if you're getting a card swiper or a mobile swiper, how long do those typically last if you're looking at $500 or a couple hundred dollars to purchase one? How long will that last you? The real credit card terminals and actual dedicated standalone terminal are designed the last years and years on end. And particularly if you purchase right now or in the next few months, pretty much everything that you're going to find is going to be EMV-compatible moving forward, meaning your technology is kind of locked in. You future-proof yourself for a long time. There are some terminals, I'll be honest, that we can still reprogram after 15 years. Not come October, but there are some out there. So terminals are designed to last a long time. So theoretically when purchasing one, assuming you don't get one that's locked or obsolete by when you purchase it, they are designed to last a very long time. Smartphone readers, however, are a different story as many of you might be aware after using Square. They're designed cheaply with the intention of they can be sold at very low cost or given away for free. And so oftentimes the smartphone dongles in particular are of lower quality and will last not quite as long. We often hear from merchants that are using Square that they'll actually keep five of them on hand because they break so often. So we have a couple of different options when it comes to smartphone swipers. There are some that are super nice and some that go all the way down to, hey, we'll give you this one for free because it doesn't cost us much either. But it definitely is, from a terminal perspective, terminals will be typically very dependable. Smartphone swipers I wouldn't put in the same category. Good to know. So they're a little bit newer in developing. Joan asked a question that I think is interesting around what percentage of transactions are Visa versus MasterCard versus Amex versus Discover? I mean, is the majority of transactions Visa and MasterCard still? Good question. Very good question. First off, this definitely depends on what kind of merchant you are. And the reason I say this is merchants who accept very high-large ticket payments, $1,000 or $3,000, $5,000, or merchants who work directly with Affluent Clientele, you're going to get a lot of Amex cards. If you deal with rich people, you will have expensive cards. And Amex always has the most expensive cards, not always but usually. So typically Amex is a low percentage of sales unless you're selling jewelry, taking high-volume donations, things of that nature. Then you might get into the 10, 20, 30, 40% of Amex sales. Typically, however, it's Visa, MasterCard. In my personal experience, whenever I do cost comparisons, usually it's about, I'd say, 60% Visa, 30% MasterCard, and the remainder is split between Amex and Discover. You often won't see many Discover cards. Good to know. And let's see, we are just about out of time. So I will ask just one other question here. What do you think is a good standard rate to look for? Like if something is 5% for their total rate, is that just out of the woods too high? Or is there an absolute difference? Yeah, so when you're comparing interchange plus pricing models, the actual plus on the interchange plus should always be under 1%. You should never be paying a percent or more for sales. I'll tell you, Dharma's Tech Supermergence are 0.2% and 10 cents per transaction. So we make one fifth of 1% and then a transaction fee. And that doesn't mean that we're always going to be the lowest. It doesn't mean that other providers can't be nearby and be fair because they can be. You might find a provider offering 30 or 40 basis points or 0.4 or 0.3% above cost. Those are all definitely within the range of what I would call a fair merchant services deal. In my personal opinion, just based on how many accounts we see, usually anybody who is doing under a half of a percent above interchange, I feel like they're getting a pretty good deal. Most merchant service providers do have work in the background and they actually are doing things on your behalf although you might not see it. As a net effective rate, you mentioned 5%. And we call that an NER in our industry. What did I pay at the end of the day? 5% sounds high to me, but again, it depends on everybody's independent solutions because you might be paying for two different gateways. You might be paying for a whole bunch of hardware. You might be paying for a bunch of things that you absolutely need. So it's hard to parse that out from a credit card processing perspective. If you're only looking at the actual processing fees, most nonprofits should be paying under 3%. Again, most, and that's hard to say across the board, but I would say just credit card processing. I'd hope that you're in at least the 2.5% to 3% range. That is really helpful. And I know we're over time, so I'm going to go ahead and wrap us up. Thank you so much, Nick, for taking the time to answer all of those questions and really explain a lot. And hopefully this will give you all of our participants out there something to start with, to be able to go out and have those conversations, go out and say to your current providers, hey, I think I should be getting a better rate. Can I get the interchange plus rate? Or hey, I didn't want to be in a monthly contract or yearly contract and renegotiate those things because this is very much like when you go to buy a house and you're negotiating for a mortgage. These are all banks and lenders in the same kind of financial services organization, so they're used to trying to negotiate and compete for your business. So make sure that you're asking the right questions so you can save your organization money and apply it to your mission, your patrons, and your constituents so you can serve them better. Go ahead and chat in one thing that you learned in today's webinar that you're going to go back and share with your colleagues and friends, or try to implement for your own credit card processing service search, and just to help us know that we helped you learn something useful today. I'd also like to invite you to join us for upcoming events. We have an NP Tech Chat on Twitter taking place next week. You can just follow that hashtag or you can click the link when you get into the slides later on. It will be focused on financing for development, so if you're a development-based organization looking at global development or UN development goals, that's a great chat for you to join. Then on Wednesday next week we're having a webinar specifically for crowdfunding for libraries. So if you're joining us from a library, learn about the different crowdfunding options out there to help support your library's work. Then we'll talk about Microsoft OneNote and how you can use that more effectively for collaboration, brainstorming, and sharing at your nonprofit and library. And then in August we'll be talking about accomplishing more with social media. And later on in August we'll be talking about Windows 10. So for those of you who are excited, keep an eye out for more on that. We're excited to have you join us for all of our webinars and to explore our webinar archives to see what we've done so far and learn more. Join us at TechSoupGlobal.org, TechSoup.org on our Facebook and on our Twitter channels. We appreciate you participating and interacting with us today. Lastly, I'd like to thank Sun and Allie for their support on the back end and ReadyTalk for their support by providing the use of this platform. They are one of our donor partners as well. You can learn about this tool if you're interested in a webinar tool at TechSoup.org slash ReadyTalk. 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