Donations power a significant share of income for charities and the systems that handle these transactions matter. In 2024, for example, 88% of US charities received individual donations, and 35% reported that those donations were their largest or second-largest revenue source. A charity payment processor enables these transactions, and a strong one can integrate with your organisation's financial and donor management systems to help maximise reach across all channels. The efficiency of this system will determine how securely donations are handled, how easily donors can give, how quickly funds reach your organisation and how much revenue you ultimately keep.

Below, we'll explain what a charity payment processor is, how charity payment processing works and how to choose the right approach for your organisation.

What's in this article?

• What is a charity payment processor?
  
• Why do charities need specialised payment processing?
  
• How does charity payment processing work?
  
• What features should a charity payment processor include?
  
• What payment methods should charities offer to donors?
  
• How should charities evaluate payment processing fees and pricing?
  
• How do charities choose the right payment processor?
  
• How Stripe Payments can help
  

What is a charity payment processor?

A charity payment processor is the infrastructure that securely accepts a donor's payment, confirms it with the bank or card network and moves the funds into the charity's bank account.

Why do charities need specialised payment processing?

Specialised payment processing is helpful because fundraising has financial and compliance needs that generic payment tools might not fully address. Consider the following:

• Donors behave differently from purchasers: Payment systems built for retail sales aren't designed for open-ended giving, fund designations or one-click repeat donations.

• Recurring giving is foundational: Monthly and annual donations help drive revenue for many charities, and they require reliable recurring billing, smart retry logic for failed payments and easy self-service updates for donors.

• Charities operate with lean teams: Many organisations rely on small finance or fundraising teams, sometimes supported by volunteers, so it's important to have payment systems that minimise manual work.

• Pricing and fee structures matter more: Charity-focused processors are built to pass along discounts that some card networks offer to registered charities. Stand-alone payment processors can also help you avoid fees charged by all-in-one donation platforms that erode revenue.

• Tax requirements might differ: Some charities are tax-exempt and have different filing requirements. Payment systems built for charities make it easier to maintain the right financial records.

How does charity payment processing work?

The payment process starts when a donor enters their payment details on a donation form via a website, mobile device or in-person terminal. After the donor clicks submit, the payment gateway encrypts the information and sends it through a secure channel.

The payment processor routes the request to the appropriate card network or bank to confirm the payment is valid. Fraud checks run as well. If the bank approves the transaction, the processor confirms the donation. If it's declined, the donor is prompted to try again, often with guidance on what went wrong.

Approved donations don't go straight to the charity's bank account. First, they are placed into a merchant account, which temporarily holds funds while transactions are batched and prepared for settlement. Alongside the payment, the processor captures transaction details and donor information. When systems are properly integrated, this data flows directly into the charity's customer relationship management (CRM) or accounting tools without requiring manual entry.

After settlement, the funds are transferred from the merchant account to the charity's operating bank account. Fees are deducted at this stage, and the net amount becomes available to use. Many charity payment processors automatically create donation receipts and send confirmation emails. This step is necessary for donor trust and meeting tax documentation requirements.

Even after settlement, payment systems continue to monitor for disputes, chargebacks or refunds. Charitable organisations can review transactions, reconcile accounts and generate reports as needed.

What features should a charity payment processor include?

Modern payment processors offer features that improve efficiency and minimise manual tasks for charity teams and their donors. Here are the features you should look for in a payment processor.

Support across varied channels

Donations can come in through websites and email appeals, often via mobile devices, as well as from events and peer-to-peer campaigns. Specialised processors are designed to support a wide array of entry points while keeping donor data unified.

Integrated, donor-friendly experience

A charity payment processor should connect cleanly with the tools organisations already rely on, including websites, donor databases, accounting systems and email platforms. Donation forms should be fast, fine-tuned for mobile and easy to customise without engineering work.

Support for multiple payment types and currencies

A strong processor supports credit and debit cards, bank transfers and digital wallets from the same system. The ability to accept payments across borders is especially important for charities with international donors. This includes being able to handle multiple currencies, local payment methods and region-specific compliance requirements.

Recurring donation management

Reliable recurring billing tools are important for sustaining long-term fundraising. This includes automatic retries for failed payments, reminders for expiring cards and self-service donor portals where supporters can update payment details without contacting staff.

Clear, real-time reporting

Built-in reporting should show transaction status, payout timing, fees, donation trends and campaign performance in a way that's easy for finance and fundraising teams to interpret and act on. Processors should automatically generate receipts, confirmations and transaction records that are easy to access later for audits or reporting.

Built-in security and fraud protection

Payment systems must meet strict security standards, including the Payment Card Industry Data Security Standard (PCI DSS), encryption and tokenisation. Advanced fraud detection helps identify suspicious activity without creating unnecessary friction for legitimate donors.

Transparent pricing and scalability

Features can lose value if fees are unpredictable or difficult to understand. Good processors explain costs clearly, pass along charity card network discounts and avoid hidden charges that can reduce donation revenue. They can support growth in donation volume, campaign complexity and geographic reach without forcing a painful migration to a new system.

What payment methods should charities offer to donors?

One way to help increase completed donations is to meet donors where they are. Payment method acceptance directly affects conversion rates, average gift size and long-term donor retention.

Here are the payment methods charities should offer:

• Credit and debit cards: Cards are a widely used way to donate online. Support for major card networks and international cards is important, especially for organisations with global donor bases.

• Bank transfers and direct debits: Direct debits and other bank-based payments tend to carry lower fees, especially for large donations. Donors who give through electronic bank transfers stay 20% longer on average and give 55% more.

• Digital wallets: Options like Apple Pay and Google Pay let donors give with a single tap. These methods minimise direct card data entry and tend to perform well on mobile devices.

• International and local payment methods: Supporting region-specific payment types can expand access for donors who need or prefer country-specific options.

How should charities evaluate payment processing fees and pricing?

Since processing fees directly affect how much funding goes to the mission, cost plays a big role in choosing a provider. Here's how charities should evaluate the costs of payment processing options.

Understand the whole pricing model

Payment processors typically use either flat-rate pricing or interchange-plus pricing. Flat rates are simple, but interchange-plus can be more cost-effective for higher-volume charities because it passes through actual card network fees with a small markup. The advertised percentage isn't the whole story: additional costs such as per-transaction fees, monthly minimums, gateway fees, currency conversion fees or payout charges can add up.

Card networks offer reduced interchange rates for some types of charities, but not every processor passes those savings along. It's important to verify that charity-specific rates are applied and reflected clearly in reporting.

Factor in payment method mix and fee coverage

Different payment methods carry different costs. Cards generally cost more to process than bank transfers, while digital wallets typically follow card pricing. Understanding how donors give helps charities forecast processing costs more accurately. Some systems allow donors to voluntarily cover processing fees at checkout. This can offset costs without pressuring donors, but it should always remain optional and clearly explained.

Consider costs and savings over time

Automation, clean reconciliation and integrated reporting can decrease accounting overhead, which often delivers more value than marginal fee reductions. A processor's fees should scale predictably as donation volume grows. Sudden pricing changes, renegotiations or feature-based surcharges can create budget uncertainty for finance teams.

How do charities choose the right payment processor?

Choosing a payment processor is a major decision that shapes how donations flow, how teams work and how donors experience giving. A good processor supports your current needs as well as tomorrow's growth.

• Start with donor experience: The checkout flow should be fast, intuitive and mobile friendly. Strive for fewer steps, clear confirmation and multiple payment options to help donors feel confident in making their gifts.

• Map the processor to existing systems: Payment processing should fit into the charity's broader technology stack. Strong integrations with donor databases, accounting tools and fundraising platforms help decrease manual work.

• Match capabilities to fundraising strategy: Organisations that rely on recurring donations need strong subscription management, while those that run frequent events might prioritise mobile and in-person payments.

• Rigorously evaluate security and compliance: Strong fraud prevention, encryption and PCI compliance protect both donors and the organisation. A strong security posture reinforces trust and could potentially lower exposure to disputes and chargebacks.

• Review pricing with long-term scalability in mind: Think beyond short-term discounts. Transparent pricing, charity rates and predictable fees matter, too. The processor should scale cleanly as donation volume and geographic reach increase.

• Assess reliability and support: Payment issues interrupt fundraising immediately. Look for a provider with proven uptime, clear documentation and responsive support that understands charity workflows.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payment performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.