Charity interchange exists. Most nonprofits are not on it.
Visa and Mastercard both operate reduced interchange programs for qualifying charitable organisations. Qualifying depends on registration and on your merchant category code, and the code is the part that goes wrong.
What this page settles.
Three questions, in the order most people ask them.
The reduced rates are real
Both Visa and Mastercard operate reduced interchange programs for qualifying charitable organisations. They are published in the networks’ own interchange schedules alongside every other category, and they are not a favour anybody is doing you — they are a rate band your transactions are eligible for if the conditions are met.
The conditions, broadly:
Recognised charitable status. In the US that generally means a 501(c)(3) determination, and you should expect to produce it.
The right merchant category code. Charitable and social service organisations commonly sit under MCC 8398. The code is set at underwriting and it decides which interchange schedules apply to you at all. MCC codes.
Registration with the networks, done by your acquirer rather than by you, which is why it sometimes does not happen.
Because interchange is 70% to 80% of what you pay, a reduced interchange band is worth considerably more than any plausible negotiation on a processor’s margin. For an organisation taking a meaningful volume of donations, this is the single highest-value thing on this page. What is interchange.
We are not quoting the specific rates here, because interchange schedules are republished twice a year and a figure typed into a web page goes stale. Ask your acquirer for the current charity schedule, or look at the networks’ published schedules directly. April and October.
Why many nonprofits never get them
Three reasons, and the first is by far the most common.
The account was boarded under the wrong code. Someone filled in an application, selected a general retail or professional services category because it was closest to the dropdown, and nobody looked again. The organisation is a charity; its merchant account is not categorised as one. It pays general interchange indefinitely.
Nobody registered it for the programs. Even with the right code, the acquirer may need to enrol the merchant for the networks’ charitable programs. That is their job and it is a step that gets skipped.
The pricing model hides it. On a flat rate, reduced interchange is invisible and worthless — the provider charges you the same 2.6% whether your interchange was high or low, and keeps the difference. A charity on a flat rate gets no benefit from charity interchange at all. That is the quietly important consequence: the programs only reach you on interchange-plus, where interchange is passed through at cost. Flat rate versus interchange-plus.
That third point reverses the usual advice for small organisations. A charity doing $8,000 a month would normally be told a flat rate is fine; if it qualifies for charity interchange, it is not.
How to check and fix it
Four steps, and the first two take ten minutes.
Ask what MCC your account is under. Your processor can tell you immediately. If the answer is anything other than a charitable category and you are a registered charity, you have found something.
Ask whether you are enrolled in the Visa and Mastercard charitable programs. A specific question with a yes or no answer.
Ask to be recoded and enrolled, and expect to supply your determination letter. Recoding an existing account is usually possible and sometimes requires reboarding; either way it is worth the paperwork.
Check your pricing model. If you are on a flat rate, moving to interchange-plus is what turns the reduced interchange into actual money. Work out your effective rate first so you have a baseline to compare against. The calculator.
Do this even if your rates feel reasonable. A charity paying a competitive-looking 2.5% while eligible for a reduced interchange band is overpaying by a margin no negotiation would recover.
Recurring donations
Monthly giving is the most valuable donation revenue a nonprofit has, and it leaks for entirely technical reasons.
Account updater is the single most important setting. Cards expire and get reissued; without the network service that refreshes stored card numbers automatically, every reissued card is a lapsed donor. For most organisations this is the largest recoverable loss in the whole operation, and it is frequently just switched off. Ask whether it is on.
Recurring transactions need the right indicator. Sent as plain keyed transactions they sit at a worse interchange tier and look more like fraud to issuers, which means more declines. Card-not-present downgrades.
Dunning matters more than retry count. A failed donation should produce an email to the donor with a one-click way to update the card, not six silent retries. Why transactions get declined.
Consider ACH for larger regular gifts. Published ACH rates are commonly around 1% capped at $5 to $10. On a $500 monthly gift that is a cap against roughly $15 on a card, and bank details lapse far less often than cards do. ACH or card.
Asking donors to cover the fee
Common, generally well received, and worth doing carefully.
As an opt-in, it is straightforward. A checkbox at checkout — “add $X to cover processing costs” — with the amount shown. Many donors take it, and it is presented as generosity rather than as a charge.
As a compulsory addition, it is a surcharge, and the card network surcharging rules apply: credit cards only, never debit or prepaid, capped at your cost of acceptance and never above 3%, disclosed before the transaction and itemised on the receipt, with advance notice to your acquirer. State law sits on top of that and changes. Surcharging rules.
The honest framing matters. A donor who ticks a box to cover costs is participating. A donor who discovers an unexplained addition at the end is a complaint and sometimes a dispute. Friendly fraud.
Set the amount accurately. If your effective rate is 2.2%, asking donors to cover 3.5% is not covering costs.
What else is worth doing
Get the billing descriptor right. A donation appearing on a statement under a holding company name or an abbreviation generates disputes from your own supporters, who do not recognise it a month later. Use the name people know you by. Billing descriptors.
Watch the fixed monthly fees. A statement fee, a monthly minimum, a PCI non-compliance fee and an annual fee are the same dollars whether you raise $4,000 or $40,000 in a month. For an organisation with seasonal giving, those are disproportionate in the quiet months. Monthly minimum and small fees.
Complete the PCI questionnaire. Under an hour, and it removes a monthly non-compliance fee that is pure waste. Which SAQ do I need.
Take event and in-person donations properly. A tapped card is card-present and cheaper than a keyed one; tap to pay on a phone turns a volunteer’s phone into a card reader at a fundraiser with no hardware at all.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed, with no contract, no monthly fee and no monthly minimum.
Because we pass interchange through at cost, a reduced charity interchange band reaches you rather than us. The first thing we would do is check your MCC — and if you are miscoded, fixing that is worth more than changing processor, including if you decide to stay where you are.
While we are on the subject
Do nonprofits get lower card processing rates?
Qualifying charities can access reduced interchange programs published by Visa and Mastercard. It depends on recognised charitable status and the correct merchant category code.
What MCC should a charity have?
Commonly 8398, for charitable and social service organisations. Confirm with your acquirer, because the right code depends on what your organisation actually does.
My nonprofit pays normal rates. Why?
Most often because it was boarded under a general code rather than a charitable one, or was never registered for the network programs. Both are fixable by asking.
Should donors cover the processing fee?
Offering it as an opt-in is common and generally well received. Making it compulsory, or presenting it as a surcharge, brings the card network surcharging rules into play.