Charitable Donations: Interchange Plus vs PayPal Cost Comparison

Registered charities with 501(c)(3) status can often obtain significant savings on their processing costs by accepting donations on credit cards using an interchange plus merchant account.

PayPal charges 2.20% + $0.30 per transaction for both credit and debit cards. The cost for a $100 donation is $2.50.

Visa's Retail 2 Interchange Rate for charitable donations is 1.43% + $0.05 for credit and 0.80% + $0.15 for debit. Add 0.11% + $0.0195 for Visa Assessments and 0.25% + $0.15 for processing services and the total cost is 1.79% + $0.22 for credit and 1.16% + $0.32. The cost for a $100 donation on a Visa credit card is $2.01. The cost for a $100 donation on a Visa debit card is $1.48.

MasterCard's US Merchant UCAF Interchange Rate for a base ecommerce transaction is 1.58% + $0.10 for credit and 1.05% + $0.15 for debit. Add 0.11% + $0.0185 for MasterCard Assessments and 0.25% + $0.15 for processing services and the total cost is 1.94% + $0.27 for credit and 1.41% + $0.32 for debit. The cost for a $100 donation on a MasterCard credit card is $2.21. The cost for a $100 donation on a MasterCard debit card is $1.73.

Cost Comparison:

The cost of a $100 donation on a PayPal account is $2.50

The cost of a $100 donation on a Visa Credit Card is $2.01 (Savings $0.49)

The cost of a $100 donation on a Visa Debit Card is $1.48 (Savings $1.02)

The cost of a $100 donation on a M/C Credit Card is $2.21 (Savings $0.29)

The cost of a $100 donation on a M/C Debit Card is $1.73 (Savings $0.77)

Statement of anaylsis of the mix of card types accepted and fixed costs (statement fees, gateway fees, etc.) is recommended before making any decisions / changes.

MasterCard Rewards and Commercial credit cards will clear at higher interchange rates, some higher than 2.20% + $0.30, but this usually more than offset by the savings from Visa credit and both Visa and MasterCard debit rates, with debit transactions comprising up to 60% of payment card transactions.