Inspired by the problems that congressman-to-be
Stephanie Herseth had collecting donations with her web site last year, I checked the payment processors that some of the candidates raising money through the web are using.
Ms. Herseth, by the way, has updater her operation and uses a
local bank to process her contributions now. Earl Pomeroy (ND-AL) also hired a local company to do his operation. But the Dakotas are not so uniformly wise; John Thune (R) uses a big D.C. media company.
First, a note on the business and technology problems of taking credit cards over the net. To process and accept credit card transactions, you need a contract with a bank that is a part of the merchant network. That contract is called a merchant account, and it enables you to feed the bank transactions (credit card numbers with a dollar amount and transaction type and some security details for confirmation) and the bank will then deposit money in your account. Later the credit card company will bill the customer.
But if the customer complains, and this is a special problem with phone and internet payments (in the biz we call them "card not present" transactions), the money must be returned. So you need a credit line to get a merchant account to ensure that you can pay these "chargebacks." But campaign committees, and especially challengers' committees, don't have the spare cash to make a big security deposit and nobody but a fool makes unsecured loans to a political campaign. Furthermore, the money that must be invested in buying and setting up a proper payment gateway is substantial and few campaigns can afford the overhead. Also, none of the merchant providers I have ever heard of will integrate their payment system with campaign finance software like FECfile, which is required by the FEC for electronic filing by all serious campaigns.
So businesses have sprung up to provide credit card processing to candidates and integrate records with campaign finance reporting.
Most of these businesses won't reveal just how much they pay for payment processing, but a few will if you search enough or call their sales reps. Here is some information I have collected.
CampaignContribution.com is an enterprise of Aristotle campaign software and integrates with their other products or it can stand alone. Their fees are quite high. If you give money to a candidate using this system, you are paying 7% plus $1 of each contribution to the processor and your candidate will never see that money. Some customers of CC.c are Doug Haines (GA12), Jan Schneider (FL13), and Bob Beauprez (CO7). There are many more.
ClickAndPledge.com is a site focused on not just campaigns but all nonprofits. Among their customers is Miles Nelson (NM1). They charge about 5% for their processing services and don't integrate with software. Like most processors, they charge more to process American Express cards (AmEx dedmands higher fees from banks).
PayPal has a new business donation service with no membership required added to their old member-to-member payment service. Paypal has the lowest rates in the industry and a world-class fraud prevention system that should appeal to more candidates. They charge about 2% to 3% for processing. Joe Donnely (IN2) uses PayPal.
If you have contributed to a campaign with a credit card, drop them a note to ask just how much of the money went to payment processors and how much to the candidate.
Most of these processors will take eight to fifteen days to deposit receipts in a candidate's account. If you need to contribute by credit card in the closing days of a campaign, you might want to check if the campaign is prepared to get a bridge loan to spend your money before it is too late.