PayPal Fees What Percentage of a Donation Does PayPal Take?

Summary

Running a nonprofit is a huge responsibility. In this post, Jonathan walks through some of the details about working with PayPal in your nonprofit. While PayPal extends discounts in their processing, it is vital to be aware of the ups and downs of using a tool like PayPal, and budgeting accordingly. 

 

PayPal Donation Transaction: Understanding Fees & Benefits for Nonprofits

PayPal has become a popular choice for nonprofits to accept donations due to its easy-to-use platform and global accessibility.

When using PayPal for nonprofit transactions, it’s crucial to understand the fee structure and various benefits.

PayPal offers a reduced fee of 1.99% + $0.49 for registered charities, making the donation process more affordable for organizations.

Donors can easily make contributions using their PayPal balance, credit or debit cards, and even set up recurring donations.

However, there might be additional fees for international donations and currency conversion.

Nonprofit organizations should be aware of these potential costs and consider implementing a payment gateway like PayPal that provides donors with a seamless and secure transaction experience.

By setting up a PayPal business account, nonprofits can manage their transactions effectively and ensure a smooth donation process, fostering a relationship of trust with their donors.

Key Takeaways

• PayPal is a popular option for nonprofits, offering reduced transaction fees for registered charities.
• When using PayPal, organizations should consider potential currency conversion fees and international transaction costs.
• Setting up a PayPal business account can streamline donation processes and foster trust with donors.

What PayPal Does and Does Not Allow for Nonprofits

PayPal is a widely used payment processor that offers various services specifically designed to cater to the needs of nonprofit organizations.

Nonprofits can accept donor donations via PayPal, making it a convenient and secure payment method.

To provide a smooth transaction experience for nonprofits, PayPal offers a discounted transaction fee for registered 501(c)(3) organizations on most PayPal products.

Compared to the standard PayPal rate for business transactions, which is 2.89% + $0.49, nonprofits receive a significant discount at 1.99% + $0.49 per transaction¹.

Organizations must provide documentation proving their 501(c)(3) status to qualify for the reduced rates.

Furthermore, PayPal allows for recurring donations, facilitating long-term support from donors and making it easier for organizations to plan and budget accordingly.

Adding a donate button to the donation page ensures seamless integration with websites.

While PayPal can process international donations, fees for these transactions are subject to an additional 1.50% charge.

Nonprofits must consider currency conversion fees and other charges when using PayPal for international donations.

PayPal does not cover any fees charged by third-party payment gateways or tools used with PayPal services⁴.

To avoid unwanted fees, nonprofits should research and understand all fees associated with their chosen payment processing tools.

Footnotes

How to Open a Nonprofit’s PayPal Account

Opening a nonprofit PayPal account allows organizations to accept donations online, provides convenient payment options for donors, and potentially increases fundraising efforts. The process is straightforward and can be completed in just a few steps.

First, create a PayPal Business account.

Select “Nonprofit Organization” as the business type and “Nonprofit” as the category.

It is essential to provide your organization’s bank account information to link it to the PayPal account and transfer funds.

Once the account is created, register your nonprofit in the account settings.

If your organization is a 501(c)(3), you can apply to become a confirmed charity with PayPal to receive a discounted transaction rate.

Familiarize yourself with the payment processing fees and options offered by PayPal to help you choose the best plan for your organization.

Adding a Donate button to your website is the next crucial step to begin receiving donations.

Customize the button by selecting specific donation amounts or allowing donors to input their desired amount.

Moreover, inform your supporters about the various payment methods, such as debit card or PayPal balance, that can be used to contribute to your cause.

PayPal also offers the PayPal Giving Fund as an option for nonprofits.

This allows donors to make contributions without incurring transaction fees on their account, as PayPal covers the processing cost.

Additionally, this service provides access to tools for setting up recurring donations, enhancing your organization’s fundraising capabilities.

Things to Be Aware of With PayPal Nonprofit Pricing

When dealing with PayPal nonprofit pricing, there are a few key aspects to keep in mind.

For registered charities, PayPal provides a discounted rate of 1.99% + $0.49 per transaction, compared to the standard rate of 2.89% + $0.49 per transaction.

Nonprofits must be aware of these fees and factor them into their fundraising budget.

An important aspect is the currency conversion fees when receiving international donations.

Payments charge a currency conversion fee, which could vary depending on the currencies involved.

This fee is on top of the transaction fees, and organizations should be mindful of the potential impact on their finances.

Nonprofits must be aware of limitations when using PayPal as their payment processor.

For instance, recurring donations are supported by PayPal, but donors need to have a PayPal account to complete the process. This could potentially deter donors who prefer not to create an account.

Navigating through fees can be confusing, so PayPal offers a fee calculator to help organizations determine specific donation amounts’ processing costs.

Utilizing this tool can aid in budgeting and planning donation campaigns.

To maximize donations, it’s essential to provide donors with a user-friendly and secure payment experience.

PayPal offers a Donate button that can be embedded on a nonprofit’s website, helping donors give quickly and securely.

While this feature is beneficial, organizations should also explore alternative payment methods, including options that don’t require an account, to cater to diverse donor preferences.

What About Security and PCI Compliance?

When it comes to online transactions, security is a top priority for both donors and nonprofits alike.

PayPal offers a secure environment for processing donations. The company adheres to the Payment Card Industry Data Security Standard (PCI DSS), a set of security standards designed to protect sensitive information during all online transactions ¹.

PCI Compliance plays a significant role in ensuring that donor information remains safe, and payment platforms like PayPal are mandated to follow these guidelines. Adhering to PCI Compliance requirements helps prevent potential data breaches, fraud, and unauthorized access to financial information.

Various measures are taken within the PayPal platform to strengthen the security of transactions.

The data encryption and fraud monitoring capabilities ensure that a donor’s financial details are well protected, making it a reliable option for accepting online donations.

In addition to keeping donor data secure, PayPal offers a range of features for nonprofits. These features enable nonprofits to seamlessly collect donations and provide an optimal experience for their supporters.

Some features include a Donate button to integrate into their donation page easily, support for recurring donations, and currency conversion options ².

The fees associated with PayPal transactions differ depending on the type of account, location, and transaction type.

For example, businesses are charged 2.89% + $0.49 per transaction, while registered charities benefit from a discounted fee of 1.99% + $0.49 per transaction ³. Furthermore, additional fees apply for international transactions, with a 1.50% fee for currency conversions ⁴.

Foreign Contributions and Conversion Charges

PayPal is a popular payment gateway that allows users to send and receive money internationally. It is especially favored by nonprofits and charitable organizations for accepting donations. However, it’s essential to understand the fees associated with foreign contributions and currency conversion charges when using PayPal.

PayPal charges a fee for each donation transaction, which may vary for registered charities and nonprofits. For general users, the rate is 2.89% + $0.49 per transaction, while registered charities can avail a discounted fee of 1.99% + $0.49. These fees help cover the cost of processing the transaction and maintaining the PayPal platform.

Currency Conversion Charges

If a donation involves currency conversion, PayPal imposes additional charges on the transaction. These conversion fees are applicable when donors provide funds in a different currency than the one accepted by the nonprofit’s PayPal account. PayPal’s currency conversion fees encompass a markup on the exchange rate, often making the transaction less cost-effective for users.

To calculate the total fees for a specific donation amount, PayPal provides tools like the CheckYa PayPal Fee Calculator. This helps organizations and donors understand the costs before initiating the transaction.

Navigating International Donations

To avoid or minimize currency conversion fees, nonprofits may consider providing multiple payment options for donors. Organizations can facilitate the fund’s transfer without incurring conversion charges by setting up separate payment accounts for different currencies. This method benefits international nonprofits that frequently receive donations in multiple currencies.

Organizations can opt for other payment gateways with competitive fees and exchange rates. Exploring alternative platforms ensures that nonprofits receive the maximum possible funds from donors and helps them meet their fundraising goals more efficiently.

Advantages of PayPal for Nonprofits

PayPal for nonprofits is a popular choice for organizations looking to accept donations and facilitate transactions efficiently. One significant advantage is the discounted transaction fee they offer to registered charities. Instead of the regular business transaction fees of 2.89% + $0.49, registered charities pay only 1.99% + $0.49 per transaction.

Moreover, PayPal is a globally recognized and trusted brand that can encourage potential donors to contribute to your cause without hesitation. They offer a simple and secure way for donors to use their payment methods, such as credit or debit cards, to make one-time and recurring donations.

Here are some key advantages of using PayPal for nonprofits:

• Ease of use: Setting up a PayPal account is simple. Nonprofits can create a custom donate button and incorporate it on their donation page or other online platforms.
• Global reach: PayPal operates in multiple countries and supports various currencies, making it convenient for organizations to receive international donations.
• Tools and features: PayPal provides additional functionalities like the PayPal Giving Fund, which helps expand your reach and connect with potential new donors.
• Transaction rates: As mentioned earlier, PayPal offers discounted rates for 501(c)(3) charities, and there are no extra fees for setup, statements, withdrawals, or cancellations.
• Multiple Payment Options: Donors can use various means, such as debit and credit cards or their PayPal balance, to send and receive money.

Disadvantages of PayPal for Nonprofits

PayPal offers a convenient way for nonprofit organizations to accept donations, but it also has some drawbacks that organizations should consider.

Firstly, PayPal’s transaction fees can be a significant cost for nonprofits. PayPal charges 2.89% + $0.49 per transaction. They offer a discounted rate for registered charities of 1.99% + $0.49. These fees can quickly add up, especially for smaller organizations or those with a high volume of transactions¹.

Another disadvantage is the potential for donors to hesitate to use PayPal as a payment method due to security concerns or unfamiliarity with the platform. While PayPal is widely known, donor’s personal preferences for payment methods can make a difference in their willingness to give.

Furthermore, PayPal lacks a fully integrated donor management system. This means nonprofits may need additional software to maintain their donor records, track donations, and generate reports. This can increase the organization’s expenses and make it more time-consuming to manage fundraising efforts.

Additionally, accepting international donations can be challenging. This is because PayPal charges currency conversion fees (2.5% for bulk transactions) on top of its standard transaction fees.

Footnotes

Frequently Asked Questions

Q: How much does PayPal take from a donation?

A: PayPal takes 2.9% + USD 0.30 per transaction for nonprofit organizations in the US.

Q: What are PayPal merchant fees?

A: PayPal merchant fees vary but typically include a percentage of the transaction amount plus a fixed fee.

Q: How can I avoid PayPal fees?

A: You can avoid PayPal fees by choosing the “Friends and Family” option when sending money or covering the fees yourself when receiving payments.

Q: What are the benefits of using PayPal for donations?

A: PayPal offers secure transactions, easy integration with websites, and a wide range of payment options, making it convenient for donors.

Q: Are there specific fees for nonprofits using PayPal?

A: Yes, PayPal offers discounted transaction fees for nonprofit organizations to help them raise money efficiently.

Q: Does PayPal charge extra for currency conversion?

A: Yes, PayPal typically charges a currency conversion fee when sending or receiving money in a different currency than your primary one.

Q: How does PayPal’s fee calculator work?

A: PayPal’s fee calculator allows you to input transaction details to estimate the fees you’ll incur based on the amount and type of transaction.

Final Thoughts

PayPal is a widely recognized and trusted platform for sending and receiving money. It is a popular choice for nonprofits to accept donations.

With its discounted transaction fees, PayPal has become an appealing option for organizations aiming to minimize expenses. For registered charities, the transaction fee is 1.99% + $0.49 per transaction.

Setting up a PayPal account for your nonprofit organization is relatively straightforward. PayPal provides a donate button that can be easily integrated into your website’s donation page.

This streamlines the donation process for your donors.

However, nonprofits should consider the fees associated with using PayPal. In addition to the per-transaction fee, PayPal charges currency conversion fees for international donations. These fees could impact the overall costs for nonprofits with a global donor base.

A noteworthy feature that PayPal offers to nonprofits is the PayPal Giving Fund, which does not charge any fees for its services. If a donor uses PayPal Giving Fund, the nonprofit organization will receive the total donation amount without additional deductions.

Alternative payment processing options for nonprofits like Donorbox and Givebutter also exist.

These online fundraising platforms offer various features, such as recurring donations and customizable donation forms tailored to the needs of nonprofit organizations.