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August 06, 2010

A DonationPay Takeaway

DpFor nonprofits, nothing demands security and reliability quite like online payment processing. So when I told a New York-based client about DonationPay, a full-service, customizable platform whose 3% per-transaction fee is the only charge its clients see, I shouldn't have been surprised when she laughed, "What's the catch?"

Today I got on the phone with Noah Sochet, who founded DonationPay a year and a half ago with Angelina Strosahl. Ever since the two met in college, they've been running Duo Web Marketing in Olympia, WA, consulting a variety of industry clients including nonprofits.

"We would often find ourselves having to explain to our nonprofit clients the incomprehensible fee structures of some online donation platforms," Noah said, adding, "And I'm not saying that to bash the great services that are out there, it's just a complicated business."

It is indeed. Try explaining to a university development officer who just invested half his budget in a CRM with payment processing that he has to manage a separate merchant account for transactions. Then try explaining that the university's name won't even appear on his donors' credit card statement, which will instead bear the name of the merchant account processor. And when donors request charge backs on billing descriptors they don't understand, the merchant account processor gets slapped with charge-back fees from the credit card company.

It's that parents-are-fighting anxiety that only happens when the nonprofit and for-profit worlds collide -- and when your parents fight. "The ugly truth about credit card fees is that they are purely for profit and not necessary," Noah said in a relaxed West Coast manner.

In this context, Noah and Angelina teamed up with Meritus Payment Solutions, a branch of Wells Fargo, for their payment processing. Noah explained that Meritus has its own merchant account gateway, which allows them to wave processing fees for nonprofit organizations. This "conveniency" setup also allows them to distribute funds collected everyday at 6:00pm -- some payment processors do this monthly -- and customize billing descriptors so that people who donate to XYZ nonprofit know where their money went.

Meanwhile, DonationPay's clients get the range of industry standard tools and customer service that nonprofits have come to expect from companies like Network for Good. The bottom line difference is that all costs are folded into the 3% transaction fee. DonationPay currently serves 126 clients, and has a staff of five, or three, depending on how you want to count it. 

According to Shabbir Imber Safdar, a San Francisco-based consultant and creator of TruthyPR, "The process of scaling for [DonationPay] will involve only scaling their customer service, not their payment infrastructure."

Shabbir recently migrated a nonprofit over to DonationPay because its previous platform had issues spanning inflexibility of form layout to limits on analytics reporting. "DonationPay appears to be a small startup, with a good focus on customer service, riding atop a very advanced payment processing engine from a larger financial processor," he said, adding, "We've worked with Noah, who has worked very hard to make us happy."       

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