What’s the least expensive way to manage credit card processing?

Staff Post
By Heather Young 

I’ve been asked for advice on the least-expensive way to manage credit card processing.

Over the last number of years, sales by cash and cheque have dwindled, and the majority of earned revenues and individual donations are received by credit and debit cards and other forms of electronic transfer. In the past, processing fees applied only to a slice of our revenue base: now the “bite” can be significant.

On the plus side, the market is becoming more and more competitive. It’s not that long ago that we all had to have multiple bank accounts if we wanted to accept multiple payment methods, because some banks were allied with Visa and others with MasterCard. These days, numerous payment processors accept all major credit cards and funnel them to the bank of your choice

The array of payment methods continues to multiply. A quick Google search turned up the factoid that direct debit was invented only in 1984. More recently, arts organizations started wrangling the 24/7 payment universe as they put their box offices online. The next generation includes methods of accepting payments by smartphone – and the evolution will continue.

If you haven’t examined your payment processing costs (and methods) lately, maybe it’s time to shop around.

I put the question of inexpensive processing for Canadian non-profits to a number of LinkedIn groups, which provide a forum for sharing knowledge among colleagues internationally. The summary that you’re reading is therefore not the product of systematic research, but rather the contributions of a number of generous folk from Canada and the US who offered their recommendations, with a little fact-checking on my end.

I’m sure this list is far from exhaustive, but it’s a good starting point for comparison shopping. Readers will need to investigate which options are best suited to their needs.

The grid below captures an array of processors. It is followed by additional tips and recommendations from LinkedIn members. Thanks to them for these great ideas!

Name of ServiceOperating in…WebsiteAccepts (per website description)Comments
5LINX Credit Card Processing / Pivotal PaymentsCanadahttp://everyswipecounts.5linx.comCredit and debit cardsThey promise the lowest discount rates in the industry.
Canada HelpsCanadahttp://www.canadahelps.orgCan accept gifts of securities as well as credit cards.A registered charity in their own right. Processes donations for other charities. Not the best rates, but you don’t have to establish your own accounts.
Chase Paymentech CanadaCanadahttp://en.chasepaymentech.caCredit cards, debit cards, online payments.
Elavon Merchant Credit Card ProcessingCanadahttp://www.elavon.com/acquiring/costco-canada/main.aspxMasterCard, Visa, AmEX, Discover, DebitOffered through Costco.
FirstData CanadaCanadahttp://www.firstdatacanada.caMasterCard, Visa, AmEx, Discover, Interac
Global Payment SystemsCanadahttp://www.globalpaymentsinc.com/Canada/Credit and debit cards.
IATSCanadahttp://www.iatspayments.com/english/about_IATS/index.htmlCredit, debit, point of sale, QR codes and mobile giving.Canadian company, focused on non-profits. A Ticketmaster subsidiary.
MOCA (Momentum Canada) Payment SystemsCanadahttp://www.mocapayments.comVisa, Mastercard, AmEx, Discover, chip and pin ATM cards.Geared to small and mid-sized retailers in Canada.
MonerisCanadahttp://www.moneris.comAll major credit and debit cards and all major point of sale solutions.
Optimal PaymentsCanadahttp://www.optimalpayments.comCard and non-card payments; chanels like IVR, MOTO and virtual terminal.LinkedIn user reports no hidden fees; just one monthly charge and credit card fee.
PayPalCanadahttps://www.paypal.comMasterCard, Visa, AmEx, Discover
SquareCanadahttps://squareup.comMasterCard, VisaNew in Canada, October 2012. Card reader attaches to iPhone or iPad. See YouTube demos.

And now a few comments from LinkedIn contributors:

Usually if you are a member of the local chamber of commerce or other similar association they have better rates than being on your own.

…Gwendoline Turpin, via Bookkeepers Club

You need to be careful when investigating payment processors. Many that we looked at offered an attractive rate but then hit you with additional fees and monthly charges that make it more expensive.

Ian Hayes, via Non-Profit Professionals Toronto

I have approximately 150 arts clients across Canada using our Theatre Manager software and the majority of these (95%+) are non-profits. We’ve built 3 PCI compliant payment gateway interfaces into the software. This allows our clients options on which merchant account provider they want to use. Predominantly, Canadian clients use either Global Payment Systems or Chase Paymentech for merchant accounts. Based on the feedback, I’ve received the fee structures are fairly comparable, but as in indicator, we’ve noticed a growing number of our clients switching to Paymentech. I’m not aware of any ‘special’ rates for non-profits. From what I’ve been told, each organization is vetted based on the merchant account provider’s risk criteria.

…Tod Wilson, via Performing Arts Administrators

I’ve been quite successful negotiating with other processors (Moneris and Global Payments) and obtaining rates equal to or better than those available through Costco. Not just for NPOs and Charities of which I have quite a few, but also for regular retail operations.

The applied rates vary quite a bit depending on the “type” of card – it’s not just about credit card vs. debit card, but affiliate, international, non-VISA/MC cards, etc.

Global Payments (at least) refers to these as Interchange Downgrade Fees (IDF) and produces two tables E5 (enhanced) and E1 (standard). Typical differences between these are between .1% and .5% depending on transaction. E1 is generally what most retailers receive. In addition, they will generally also provide free (or reduced-price) terminals.

The details of the fees are complex as there are 31 card categories. It depends on which your client receives most – and the average value, volume etc. of these.

…Don Hobsbawn, via Sage 50 Canadian Edition Sage Accountants Network Members

Don is absolutely correct. If you know the number of monthly transactions, monthly volume in $, average transaction amount and types of cards being used you can negotiate better rates from your Merchant Account Provider (MAP).

If you already have a merchant account you should compare the numbers at the end of your first year with the numbers forecast when the agreement was put in place. You may be able to renegotiate the contract for a better rate if the numbers are higher than the initial projections.

It also doesn’t hurt to let your existing MAP know that you are shopping around. That can motivate them to offer better rates, or even to match the best rate you can find.

To provide the most flexibility in payment types NFP’s & Charities can look at a Paypal Merchant Account that offers many donor / payment options through a website gateway.


If the NFP / Charity is small, and don’t want to carry the monthly fees and equipment rental costs they can look at “Card Not Present” or online based systems that may offer reduced rates.


There are also fee based organizations that provide payment options for Registered Charities that may not have the infrastructure to provide payments, anonymous or recurring donations and tax receipts. They take a percentage of each donation, then EFT the balance to the Charity.


Before you recommend any of these options you’ll need to conduct a thorough assessment of the needs of the organization to help find the best fit! If you’d like to evaluate the different MAP’s there’s a guide on building a spreadsheet to do so at:


…Dave Greene, via Sage 50 Canadian Edition Sage Accountants Network Members

(Note on Dave’s last suggestion: the link takes you to the website of FirstData, which of course wants you to use their service! However, they provide useful generic information on how to evaluate your options.)

Ten Tips for Audit Committees of Not-for-Profit Organizations

KPMG has put together an excellent tip sheet on audit preparation for not-for-profit organizations.

The tips can be found in brief below, but visit the full tip sheet at KPMG’s website to view each “to do” item in detail.

KPMG’s Ten To-Do’s for Audit Committees of Not-for-Profit Organizations

  1. Stay focused on the audit committee’s top priority: financial reporting and related internal control risk.
  2. Stay on top of the first year audited financial statements applying the accounting framework.
  3. Continue to monitor accounting judgments and estimates, and prepare for accounting changes.
  4. Consider whether the audit committee has the right mix of talent.
  5. Consider whether the financial statements and disclosures tell the organization’s story.
  6. Focus risk governance efforts on reviewing reputational risk identification and management efforts.
  7. Consider updating policies. In almost all processes, IT developments are leading to rapid increases in electronic transactions.
  8. Understand how technology change and innovation are transforming the business landscape – and impacting the organization.
  9. Focus on the organization’s plans to grow and innovate.
  10. Reassess the organization’s vulnerability to business interruption, and its crisis readiness

Click here to view the full KPMG tip sheet.


Sage announces product name changes

Staff Post
By Anna Mathew

Sage, the makers of Simply Accounting, have announced several brand changes, including a new naming structure for their products.

What’s changing?

From the Sage website:

In 2012 the names of many of our core accounting and ERP lines, including those designed for nonprofits and the construction industry, are changing. These products will be identified with a numbering approach where higher numbers denote increasing levels of product capability or sophistication. Our product numbering sets include Sage One, Sage 50, Sage 100, Sage 300, and Sage 500.

However, these changes are more than in name alone. Each product family will offer integration to common business solutions such as CRM, Fixed Assets, HRMS, and Payroll. Sage Connected Services provide additional capabilities, including online payment processing, mobile access, and data security, while product support through Sage Business Care and Sage Advisor technology ensure you get the most from your Sage investment.

You can read more at the new Sage website.

Accounting for In-kind donations

Staff Post
By Heather Young

The topic of accounting for in-kind donations came up on one of my LinkedIn groups, and I thought I would share some content.

The person asking the question reported that her not-for-profit agency has an operating budget of about $300,000, but each year secures about $200,000 more in donated goods and services. She’s been struggling for years with how to reflect this appropriately to her donors and funders – particularly given an accountant who doesn’t understand the issues and can’t provide the advice she needs.

That seems like a good place to start. A chartered accountant with not-for-profit expertise is a tremendous resource when it comes to measurement, reporting and disclosure issues such as this. The not-for-profit sector has specific accounting needs, and having the right expertise on board is crucial to getting the best financial advice and reporting.

The reporting – or not – of in-kind donations in your financial statements is a matter of accounting policy. You – with advice from your accountant – need to develop the best policy framework for your organization. Here’s what the Canadian Institute of Chartered Accountants offers as guidance:

“Donations-in-kind also present accounting considerations that require judgment. If the accounting policy is to record donations-in-kind, a contribution of goods or services may be recognized in the financial statements when a fair value can be reasonably estimated and when the donated goods or services would otherwise have been purchased. Fair value would be estimated using market or appraisal values at the date of the donation.”

(From A Guide to Financial Statements of Not-For-Profit Organizations, available online.)

Can you substantiate the fair market value of the donations? That tends to be relatively easy for physical objects, much harder for services/pro bono work/volunteer time. Because of this measurement difficulty, an accountant might steer you away from including in-kind gifts in your financials – or they might agree with reflecting tangible gifts but advise against trying to quantify volunteer time and other services.

The Charities Directorate of the Canada Revenue Agency has specific requirements for determining the fair market value of donated items, detailed here.

If your policy is not to include the value of in-kind donations in your statements, you should be able to find other avenues for conveying the full scope and impact of your organization. For instance, you might discuss with your accountant the appropriateness of a detailed note to your financial statements describing the in-kind support you receive.

You could also look at the different types of financial reports you produce. Your formally prepared audit may not capture in-kind gifts, but you might also present to donors and funders a supplementary statement that adds the value of in-kind items to your formal statements.

An annual report could provide an avenue for describing these resources and what they mean for your organization’s work. Annual reports often contain photos, graphs, charts and other illustrations that add impact to your description.

The area of social accounting tries to get to grips with this issue – an important one for many nonprofits, because cash transactions reflect only a portion of our economic activity. Here are a couple of links to publications that might help by discussing the accounting issues and proposing practical solutions:

On the whole, it’s to your advantage to reflect all the value you can within your organization. However, it’s also important to know the government regulations and generally accepted accounting principles that guide the reporting of this information.

We were audited by the Canada Revenue Agency but we don’t understand or agree with the outcome. What recourse do we have?

The results of your audit should be contained in a formal letter from the Canada Revenue Agency (CRA). It should advise you on the procedure for filing an appeal: the contact information, the time limit by which you must file, and the required documentation. Or, you can contact the CRA’s Business Window at 1-800-959-5525 for assistance.

If you’re in doubt about the findings of the audit, consider this. If you file an appeal, you can always withdraw it – but if you don’t file by the expiry of the time limit, you will be considered to have accepted the audit results.

This is a great example of a case where you should seek expert professional advice on your particular situation. Many accounting and legal practices have tax experts on staff, or can evaluate whether you would benefit from discussing a tax appeal with a specialist.