Online donations using PayPal

I’ve been researching simple online donation solutions for the school where I work.  One of our main criteria for this is not so much the data integration (i.e. seamlessly integrating the donor information with our donor database), but finding the lowest cost service possible.  Many online donation portals charge 4%-5% or more per transaction, which was too much for us.  We also did not want to invest in our own merchant account / secure ordering setup, which would take too long, and use up too much of my time.  My research took me back to an old pal – notably, PayPal.

The PayPal solution

PayPal has a basic Web Payments offering, which comes in two flavors, Pro and Standard, discussed below (and comparison here).  They also have a “Donations” solution, but from my reading this is just a re-branding / simplification of the Standard package.

The first benefit of these PayPal solutions is that they offer significantly lower transaction costs than any other service I had seen – starting at 2.9% per transaction (and dropping depending on cashflow volume) – plus $0.30 per transaction (e.g. $3.20 on a $100 donation.)  There is a one-time $25 “application” fee.

Both the Pro and Standard services offer the following:

  • Support for recurring payments
  • Simple cash / transaction reporting
  • Tickets / products sales (if need be; we might expand beyond just donations)
  • Accepts Visa / MC / AmEx / Discover
  • PayPal accounts are not required for purchasers (or donors, in our case)

Web Payments Standard

This option is free.  Essentially, you get a “button” on your website that takes you to a customized PayPal page (which you get to customize with your message, your logo, and your “products” – or in our case, just “donations.”)  While there is a downside to punting people off of your website, it’s better for us because we avoid the extra overhead, and PayPal is a recognized and trusted brand.

Web Payments Pro
This option costs $20/ month.  This allows you to process purchases (or donations) on your website, using PayPal APIs or other remote solutions.  You will either need a shopping cart application, or need to build something similar yourself.  Why?  Because you need some sort of application that can track and “hold” purchaser information for the period of the transaction as they go through several pages (credit card info; donation amounts; address confirmation; payment confirmation; etc), and also be able to skip the add’l info pages if the person indicates they have a PayPal account (this is a requirement on the part of PayPal itself).  Even just these two requirements means that this kind of solution is not a single one-page form- which for us meant we’d need to invest time and money in this that we didn’t have.  If you’re going this route, you’ll also need to apply for and purchase a security certificate (about $300/year), in order to ensure your website security meets the appropriate financial security requirements.

PayPal – a victim of success? (I.e. the phishing problem)
One of my concerns starting a PayPal payment system is the huge volume of phishing scams that fake PayPal info requests.  I confirmed with the PayPal rep that in 99% of the cases, PayPal does not follow-up with the purchaser – usually only the merchant.  So that reduces our scam management – we tell all donors that they should never expect nor respond to a PayPal email; and then we can manage internal resources (i.e. staff at our school in the financial dept) with training to spot legitimate PayPal emails form scams.

Virtual terminal
One idea we toyed with before looking into this was accepting donations via a simple web form, which would then send a secured email to our financial office, who would then enter the credit card info into the a card processing terminal (like the little ATM / Credit terminals at grocery stores).  Well, it turns out that not only is this a little dodgy legally, but our financial staff (understandably) didn’t want to type in credit card info all the time.

However, having that terminal is useful.  We do sell items at the school which get processed via this terminal; and if ever someone calls and wants to make a donation over the phone – as opposed to typing in their credit card info – we’d need a system to process that.

Well, it turns out PayPal also offers Virtual Terminal, which is essentially the same functionality but via a secure web page.  So we can process orders for the annual theatre show and t-shirts, as well as take phone order donations, using this secure web page.  The extra benefit? It’s the same processing fee as the regular service, which turns out to be less than our current processing fee for our actual credit card terminal.

Virtual terminal is included in the Pro package; otherwise it costs $20 a month.  Essentially for us, we are looking at the Standard package (with the button that takes donors to PayPal) and adding the Virtual Terminal – which is no more expensive than the Pro package, but can get us accepting donations online in a matter of days.

A quick overview of what I just described is here.

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4 Responses to “Online donations using PayPal”

  1. 1 Peter February 18, 2007 at 10:17 pm

    Ok, so I’ve been looking at the same paypal solutions for a small orginization, and the thing I don’t get is this: If you’ve going to the trouble of making it possible for *anyone* to go to your website, click the button, and pay via paypal, why do you need the virtual terminal?

    Instead of using the virtual terminal, can’t you just go through this on behalf of the customer and submit the information they gave you via your website/paypal rather than with the virtual terminal? Does that violate the TOS?

  2. 2 smokinggoat February 20, 2007 at 11:28 pm

    The short answer – and my guess – is yes, it probably violates the terms of service. I used a (real life) terminal when working the door at a small theatre – and all we needed to enter into the terminal was the card #, exiration, zip code and digits of the street address as a (very basic) security measure. Since there was an intermediary human involved in the process, I believe there is a different level of security required? Or something.

    I think if you don’t need to enter written/ phoned in orders too often, you could probably get away with not using a virtual terminal. But if you’re like us, and expect a lot of written and phone orders too, I think the virtual terminal can help streamline that process – I just have not seen how, but it’s a guess. I might have more answers for you when we begin usin it.

    And of course, nothing i say here is an official recommendation, nor carries legal weight. IANAL. 🙂

  3. 3 tv bracket April 9, 2008 at 10:06 pm

    I personally prefer full automatic transaction. I could tolerate paypal method of single direction verification towards purchaser only a bit, but I don’t like having unattended human intermediation for my credit card transactions.

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