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If you run or want to start a nonprofit, you should be super picky when choosing a credit card processor – even if it’s tempting to go with a popular name. Imagine having to deal with high processing fees that eat into your donations, leaving less for your mission. Or inadequate donation management tools that lead to lost data and trust issues with your donors. What about delayed access to your funds, which can hinder cash flow and critical day-to-day operations?With its widespread adoption by small businesses and free equipment, Square might look like a safe choice. But how does Square really stack up for nonprofits? I researched the merchant service provider for several days to find out just how, and I discovered that it offers several features nonprofits can take advantage of. That said, it doesn’t provide any special rates or offerings to nonprofit organizations, and its pricing is not exactly budget-friendly. There are better and more affordable choices that might serve your nonprofit’s unique needs better. I suggest you read on to discover where Square shines and where other credit card processors outperform it.
What Square Does Well
Donation Management
Square allows you to set up and manage recurring payments via your online dashboard, Square Invoices app, or POS app. This provides a secure and seamless process for receiving ongoing contributions from your donors.You also get access to Square’s donation checkout links, which you can send to your most loyal patrons via social media or email. While creating this link, you can set up a donation goal – so your donors know how much you’re trying to raise – and an end date for this goal to drive urgency. You can also update the donation goals and end dates of existing links.In addition to donation links, Square lets you put a Donate button on your website or blog, streamlining the contribution process for your patrons. You can customize the donate button to match your organization’s brand and style, including adjusting the button’s shape or editing the button text to read “Subscribe” for your repeat donors.Another great functionality is Square’s direct integration with Cash App, its subsidiary. With Cash App, your patrons can easily make donations without sharing their card details. All they have to do is scan a QR code, whether in person with their mobile devices or at home on their desktop devices.
Solid, Built-in Merchant Tools
You can sign up for Square for free and immediately start receiving donations. The free account comes with several useful features that other merchant services charge for. These include free hardware, next-day transfers, a free online store for selling merchandise, and more. Every Square merchant gets a free, highly portable mobile card reader. You can connect this device to your phone, tablet, or laptop and collect in-person donations at fundraising events or public spaces. One thing I like about this card reader is that it doesn’t require charging or battery replacements. Plus, you can process payments even if you’re temporarily offline.The mobile reader is great for informal events, like booths at local fairs or marketsIf you frequently take mail order/telephone order (MOTO) payments, you’ll appreciate Square’s virtual terminal. It allows you to manually enter payment details for donations received via mail or phone, ensuring you don’t miss out on these contributions.Square also lets you create and sell tickets for fundraising events. It integrates with several event planning apps, such as Eventzilla, Event App, SimpleTix, and more.
Reporting and CRM
Square provides detailed reports and analytics to help you track donations, manage finances, and plan growth strategies for your nonprofit based on data insights.You also get a customer relationship management (CRM) tool for creating, importing, and managing donor profiles. This can help you build strong relationships with contributors and personalize communication strategies.
Where Square Falls Behind
High Transaction Fees
Square’s transaction fees are slightly higher than those of competitors like Leaders Merchant Services (LMS). LMS’ processing rates start as low as ~0.15% + $0 per transaction, whereas Square’s standard fee is 2.5% + 10¢per transaction. Other payment processors also offer lower rates.What’s more, unlike competitors like Helcim, Square doesn’t offer any discounts for 501(c)(3) organizations. These fees can accumulate, especially if your nonprofit processes many transactions. Even if your nonprofit doesn’t take many contributions right now, the fees will eat into your donations as you grow.
Unexpected Freezing of Donations
Square has a reputation for withholding funds and terminating accounts unexpectedly. If your donation activities suddenly spike,Square might flag this as suspicious and potentially block your account. This can severely disrupt your nonprofit’s cash flow and delay your projects or operational funding. You can mitigate this risk by completing your profile comprehensively and submitting all the required documents upon signing up with Square. It’s not a surefire solution, as customer reviews claim Square blocks accounts randomly. But it’s the best hack I can give you right now.
Poor Customer Support
The two available support channels (phone and email) are nothing to write home about. Phone support is hard to reach, even as a customer. You need a customer code to reach their line, so if your account gets closed, phone support is not an option (since you can only get the code from within your account). As for email support, I got no response when I submitted a request to Square.Nonprofits, in particular, require prompt support to ensure smooth operations, especially during high-volume events like fundraising campaigns. If inadequate support harms your ability to respond to donor queries or payment issues, donors could lose trust in your organization. So, I’m not too pleased with Square’s available support channels.
Square Alternatives for Nonprofits
To understand how Square really measures up, it helps to see what other top payment processors offer. Read on to see if our top-rated providers have what your nonprofit needs.
This payment processor allows you to choose from two or more different pricing models for paying credit card processing fees. Each model will come with its own advantages and disadvantages, so make sure to consider your options carefully before deciding which is right for your business.
Leaders Merchant Services (LMS) offers some of the lowest processing fees on the market – significantly lower than Square. Not only that, but LMS promises to either meet or beat the rates of your current payment processor,so there’s definitely room for negotiations. Its fees typically start from as low as ~0.15% + $0 per transaction, accompanied by a $9.00 monthly fee. Another reason why I recommend Leaders Merchant Services over Square is the free hardware it provides. Sure, Square provides a free mobile card reader, but LMS’s hardware options are more extensive and include Clover POS systems and SwipeSimple terminals. The Clover devices have a donation app that allows you to collect contributions and generate reports on the donations you’ve received.LMS also has a subscription tool to enable and manage recurring payments from your most loyal donors. And if your organization is just starting out and needs some extra capital, you can get a loan from Leaders Merchant Services. The funding requires no collateral or deadlines – you can just pay it back through small commissions on your future donations.
This payment processor allows you to choose from two or more different pricing models for paying credit card processing fees. Each model will come with its own advantages and disadvantages, so make sure to consider your options carefully before deciding which is right for your business.
Paysafe is an excellent option for nonprofits that operate internationally or receive support from foreign donors. It can accept 250+ payment methods, including Paypal, Skrill, Venmo, ACH, and debit and credit cards. Moreover, Paysafe accepts 40+ currencies, allowing your donors everywhere to easily contribute in their local currency.I like that Paysafe partners with Vindicia, a subscription management platform. Your nonprofit can use this tool to set up, enhance, and keep track of recurring donations. You’ll also be able to use Vindicia Retain to recover donation transactions that may have failed to go through initially.Paysafe accepts high-risk ventures, which is great since nonprofits are sometimes classified under this category. The Paysafe Encytro Advantage program allows you to get reimbursed for chargebacks. You’ll have to pay a monthly fee of $29.95 per location, but that’s still better than paying fees for every chargeback. Paysafe’s cheapest plan goes for 0.50% + $0.10 per transaction and $7.95/month.
With subscription-style pricing, you’ll pay a fixed monthly fee instead of a percentage-based markup on each credit and debit card transaction. While this will considerably reduce your per-transaction fees, you’ll typically still pay a small flat fee on each transaction. This amount is unaffected by the variable interchange fees charged by the different card networks (e.g. Visa, Mastercard), helping to keep your payment processing fees more predictable.
Stax is for you if your nonprofit processes over $8,000 monthly – you can save up to 40% if your donations exceed this amount. You’ll benefit greatly from Stax’s small per-transaction fee of 15¢ + interchange (online). It does come with a high $99.00 monthly fee, but $99.00 per month can be much smaller than what you’ll lose from high transaction rates like Square’s. I’m a big fan of Stax’s contactless virtual terminal, and I think you’d be, too. With it, you can send invoices, receive donations via email or text, and set up recurring payments for your donors as needed. You can also collect contributions over the phone by securely keying in sensitive payment information while on a call. Stax also allows you to pass the per-transaction costs of processing onto your donors. It will increase the cost of a donation, but donors will inherently be more tolerant of that than traditional customers, so it’s a great way to reduce your credit card processing bill.
Interchange-plus pricing involves two fees for each credit or debit card transaction. The first is the interchange fee, a variable amount set by the card network (e.g. Visa, Mastercard). The second is a markup fee charged by the payment processor, typically a percentage of the transaction amount plus a small flat transaction fee. This allows you to see exactly how much of what you pay goes to the card networks and how much to the payment processor.
Helcim is the best credit card processor for nonprofits that do direct charity work/aid. Helcim offers charities discounted interchange rates for any donations made via Visa and Mastercard credit cards, starting from as low as 0.65% + 15¢. Even the general rates start as low as 0.50% +25¢ (online) per transaction. And if your nonprofit brings in $50,000+ every month, you’re eligible for much lower rates of 0.30% + 8¢ (in-person) per transaction.Helcim also has several tools that every nonprofit (not just charities) can benefit from. This includes a “donate” button, which you can add to your website by copy-pasting a few lines of code. Helcim also provides a secure card vault that protects your donor’s credit card details whenever they make donations through your site.
You can also set up recurring donations using Helcim’s subscription management system. This tool will track how many contributors are donating monthly, automate payment reminders, and alert you if a donor’s credit card expires soon.
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Relevant Square Plans for Nonprofits
Square doesn’t have any special plans for nonprofits. But I have to give Square credit for being very transparent with its pricing, as there are no hidden fees.There is a plan that comes with zero monthly fees, so you only need to cover the processing cost. It includes a free mobile card reader, but you won’t get advanced features that come with Square’s premium packages, such as a custom domain for your website, abandoned cart recovery, and more.If you’d rather have these features, you’d have to opt for one of Square’s paid plans – Plus and Premium. The Plus plan starts from 2.5% + 10¢ per transaction and $89.00per month and is more suitable for retailers and restaurants. Square’s Premium plan, on the other hand, is great for high-volume nonprofits (those that process over $250,000 per month). You can contact Square for a custom quote if you fall under this category.
Is Square the Best Option for Your Nonprofit?
Square is a decent credit card processor for nonprofits, but it’s not the best. You get features like a Donate button to add to your website, making it easier for donors to contribute to your cause. You can also create and send donation checkout links to supporters via email or social media. And you can easily set up and manage recurring donations through your online dashboard.While all this is great, Square is too expensive for most nonprofits. The processing fees might not look like much initially, but they’ll quickly add up – especially as your nonprofit becomes more successful. As such, I recommend going for Leaders Merchant Services1, which offers much lower fees than Square and even allows you to negotiate a rate you’re comfortable with.
FAQs
Can you use Square for a nonprofit?
Yes, you can use Square for your nonprofit. It provides several useful features, including donation buttons, checkout links, a free mobile card reader, and a donation management dashboard for setting up and managing recurring donations. That said, Square is a bit costly for nonprofits. Consider cheaper options like Leaders Merchant Services, which lets you negotiate your rates.
Does Square reduce fees for nonprofits?
No, Square doesn’t waive or reduce fees for nonprofits. You get the same pricing and plans as other types of businesses, and these rates can be quite high for 501(c)(3) organizations. Helcim, on the other hand, offers discounted rates for charities that accept donations via Visa and Mastercard. You can also get a custom rate from Helcim if your donations exceed $50,000 monthly.
Can you accept donations on Square?
Yes, you can accept donations on Square. You can create donation checkout links and send them to your donors through social media or email. When a donor clicks this link, they’ll see how much you’re trying to raise and the date you plan to reach this target. This transparency can help encourage timely and appropriate contributions.
How much does Square charge for donations?
Square charges a minimum of 2.5% + 10¢ per transaction, which is relatively costly compared to alternatives like Paysafe, which charges as low as 0.50% + $0.10. If you get $8,000+ in monthly donations, you can get even lower rates with Stax. And while Stax’s monthly fee is up to $99.00, you still save much more than if you used Square.
Kamso specializes in writing about credit card processing and fintech. He has been writing for over three years and has worked on several comparisons, product reviews, and news stories. He has a degree in mechanical engineering and has a strong fondness for anything tech-related.
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