Best Merchant Accounts for Nonprofits & Donations

For nonprofits, every donation matters. The right merchant account can make the difference between a smooth donor experience and costly inefficiencies that eat into the funds that could support your mission. Merchant accounts are the backbone of modern donation processing, helping nonprofits accept online, in-person, and mobile payments securely and efficiently.

In this guide, we’ll cover everything you need to know about merchant accounts for nonprofits in 2025—from why they’re essential, to the features you should prioritize, the top providers available, ways to cut fees, and steps to ensure a smooth setup. Whether you’re a small nonprofit just starting or a large organization seeking better payment solutions, this comprehensive resource will help you make a well-informed choice.

Understanding Merchant Accounts for Nonprofits: Why They Matter

Merchant accounts are more than just payment processors—they’re the foundation of trust and efficiency for any nonprofit accepting donations. Understanding why they are important can help your company select the best supplier and avoid common pitfalls.

Nonprofits can accept a variety of payment methods, such as digital wallets, ACH transfers, debit cards, and credit cards, by using a merchant account, a particular kind of bank account. While it may seem easier to use personal accounts or basic payment apps, doing so can lead to compliance issues, donor mistrust, and disorganized financial records.

Why Merchant Accounts Are Crucial for Nonprofits

Merchant accounts serve as a secure bridge between donors and the nonprofit’s bank account. Here’s why they’re indispensable:

• Trust and Credibility with Donors: Supporters expect professional payment systems. Using secure, nonprofit-focused merchant accounts signals legitimacy.
• Efficient Fund Management: Funds from different channels—online, mobile, and in-person—are deposited into one streamlined account.
• Compliance and Transparency: Regulations often require nonprofits to maintain separate donor funds accounts from operational accounts to ensure accountability.
• Seamless Multi-Channel Donations: From websites to text-to-give and social media fundraising, merchant accounts make it easy to manage contributions across all platforms.

Key Challenges Without a Dedicated Merchant Account

Organizations that skip setting up a proper merchant account often face these challenges:

• Limited payment options for donors
• Higher per-transaction fees due to a lack of nonprofit discounts
• Potential compliance risks or penalties for co-mingling funds
• Weaker fraud detection and donor data security

In the digital age, donors expect fast, secure, and flexible giving options. A dedicated merchant account not only provides these but also enhances your nonprofit’s credibility.

Best Practices for Leveraging a Merchant Account

• Choose accounts that integrate easily with your fundraising tools.
• Regularly review transaction reports for transparency.
• Utilize merchant accounts equipped with advanced security features to safeguard donor information.
• To accommodate varying donor preferences, offer a range of payment options.

Key Takeaway:

A reliable merchant account is more than a tool for collecting funds—it’s a trust-building resource that strengthens donor relationships and simplifies nonprofit financial management:

Key Features to Look for in a Nonprofit-Friendly Merchant Account

Selecting a merchant account isn’t a one-size-fits-all decision. The right provider depends on your nonprofit’s size, fundraising style, and the preferences of your donors. Understanding the must-have features will help you avoid unnecessary costs and inefficiencies.

Essential Features Every Nonprofit Should Prioritize

Here’s a breakdown of the key features to look for when choosing a merchant account:

• Low Processing Fees: Many providers offer reduced rates for nonprofits (around 2.2–2.5% per transaction).
• Transparent Pricing: Avoid hidden monthly or cancellation fees that can strain your budget.
• PCI Compliance and Data Security: To safeguard donor data, ensure that secure payment methods, robust fraud detection, and effective encryption are in place.
• Recurring Donation Support: Nonprofits benefit from consistent cash flow when donors set up automated monthly contributions.
• Integration with Fundraising Platforms: Choose providers that sync seamlessly with platforms like Donorbox, Classy, or Givebutter.
• Multi-Channel Payment Options: Look for support for ACH transfers, credit/debit cards, PayPal, Apple Pay, and Google Pay.
• Robust Reporting Tools: Access to detailed transaction reports streamlines accounting and provides valuable insights into donors.
• Responsive Customer Support: 24/7 assistance is crucial, especially during campaigns or events.

Features Comparison Table

Common Pitfalls to Avoid

• Signing up with accounts that have hidden fees or lack transparent pricing.
• Choosing providers without nonprofit discounts increases costs unnecessarily.
• Using accounts that don’t integrate with your donation software causes workflow issues.

Best Practices

• Create a feature checklist before meeting with providers.
• Prioritize ease of integration over flashy features.
• Test the donation experience to ensure it’s simple and user-friendly for donors.

Key Takeaway:

By focusing on the right features—especially low fees, integration, and security—nonprofits can choose merchant accounts that save money and improve the donor experience:

Top Merchant Account Providers for Nonprofits in 2025

The merchant account landscape is competitive, with many providers offering nonprofit-friendly solutions. Here’s a closer look at the top players for 2025 and what makes them stand out.

Top Providers Comparison

Why These Providers Stand Out

• PayPal: Ideal for nonprofits seeking global credibility and a quick setup.
• Stripe: Best for organizations with tech resources to customize payment systems.
• Square: Great for nonprofits hosting in-person events and fundraisers.
• FundlyPay: A strong choice for organizations focused on online giving.
• Authorize.Net: Trusted by large nonprofits that need advanced fraud prevention.

Tips for Comparing Providers

• Assess monthly fees and payout timelines.
• Review integration compatibility with existing platforms.
• Evaluate the quality of customer support, particularly during periods of intense campaigns.

Key Takeaway:

The best provider for your nonprofit depends on your fundraising style and priorities—whether it’s global reach, low fees, or event-based solutions:

How to Reduce Fees and Maximize Donation Impact

Payment processing fees are unavoidable, but nonprofits can take steps to reduce them and maximize the funds that go directly to their cause.

Strategies to Cut Costs

• Request Nonprofit Discounts: Many providers offer reduced rates for verified 501(c)(3) organizations.
• Encourage ACH Transfers: ACH often has lower transaction costs compared to credit cards.
• Offer Recurring Donations: Regular giving reduces processing friction and improves cash flow.
• Choose Volume-Based Pricing: Negotiate lower rates for higher monthly transaction volumes.
• Avoid Unnecessary Add-Ons: Focus on essential tools to avoid extra charges.
• Regularly Review Statements: Monitor fees to identify patterns and opportunities to renegotiate.

Example: Fee Savings Impact

If your nonprofit processes $100,000 annually in donations:

• A 2.9% fee would cost $2,900
• A 2.3% fee would cost $2,300
• That’s a $600 annual savings just by negotiating lower rates.

Pro Tips

• Opt for donor-covered fees where available.
• Run seasonal campaigns during lower-fee promotional periods.
• Utilize ACH for larger donations to further reduce costs.

Key Takeaway:

Small reductions in processing fees can save nonprofits thousands of dollars annually, ensuring more donor funds go directly to the mission:

Setting Up and Managing Your Merchant Account for Success

A smooth setup ensures your nonprofit can begin accepting donations quickly and securely without delays or technical roadblocks.

Steps to Get Started

• Prepare Legal Documents: Gather your nonprofit registration, tax-exempt certificate, and financial records.
• Compare Providers: Use your feature checklist to identify the best match.
• Integrate with Donation Platforms: Ensure compatibility with your website and fundraising software to facilitate seamless integration.
• Enable Recurring Payments: Make it easy for donors to give regularly and consistently.
• Offer Multi-Channel Giving: Include mobile wallets, text-to-give, and QR codes.
• Monitor Transactions: Watch for chargebacks, refunds, and fraud alerts.
• Train Your Team: Educate staff and volunteers on how to use the account efficiently.

Management Best Practices

• Run monthly audits of transaction fees and donor trends.
• Provide transparent donor receipts to maintain trust and confidence.
• Keep security features up to date to protect sensitive information.

Key Takeaway:

A well-structured setup process ensures seamless operations, donor trust, and compliance—laying a strong foundation for sustained fundraising success:

Conclusion

Selecting the best merchant account for nonprofits and donations is crucial for building trust with donors, improving financial management, and reducing operational costs. With the right provider and strategies in place, nonprofits can maximize every dollar donated and effectively advance their mission.

FAQs

Do nonprofits need a separate merchant account for donations?

Yes. A separate account ensures security, transparency, and better financial tracking.

Can small nonprofits use PayPal or Stripe without extra fees?

Yes. Both offer nonprofit discounts when organizations submit proof of their tax-exempt status.

Which merchant account is best for international donations?

PayPal for Nonprofits is highly recommended for global reach and donor familiarity.

How long does it take to set up a merchant account?

Most providers approve applications within 24 to 72 hours, provided all required documents are in order.

Are ACH payments cheaper than credit card donations?

Yes. ACH transfers typically come with lower transaction fees, which saves nonprofits money in the long run.

Additional Resources

• – Advanced API and recurring donation support