Does your church or ministry have online and mobile giving? If so, are you aware that it is likely you are being overcharged through a handful of hidden fees? Not awesome. Hopefully, this is not the case for you, but the unfortunate reality is that many churches are paying extremely high percentages on every giving transaction, and they don’t even know it.

Most churches have decent processing rates but have high effective rates – and that’s where the problem lies. Not sure how to figure this out? Let’s take a look at how to find what your effective rate is, what you can do about it, and how you can discover those hidden fees.

Red Flag #1: No clarity about your effective rate

Wait….what’s an “effective rate” and how do I find mine? Any giving provider you talk to should (hopefully) be transparent about their processing rates, but they may not go into much detail about their effective rates. These two things are NOT the same. In many cases, the effective rate may be higher than the processing rate.

So what exactly does “effective rate” mean? Your effective rate is going to be the total percentage of money that the giving provider (and any third-party service involved with the transaction) is taking from every donation. This is where the hidden fees come in and are often labeled as processing fees, per transaction fees, monthly fees, interchange fees, PCI compliance fees, merchant account fees, and more.

You can figure out your effective rate by taking a look at specific line items on your monthly giving statement. First, add up all of the fees your giving provider charged on that statement (this includes everything we mentioned above), and then divide that number by the gross donation amount on that statement. Boom. There’s your effective rate.

Red Flag #2: An effective rate above 3%

Let’s say you just did the math, and it turns out your church’s effective rate is around 4%. That’s not good. You can get a much better rate. Despite offering decent processing rates, many companies charge extra hidden fees for some of those things we mentioned above, such as interchange, PCI compliance, merchant accounts, and more, which cause the total effective rate to be much higher than the processing rate. What’s even worse is that most churches in this scenario may not realize that they are paying these extra fees. We want to help change this; that’s why finding your effective rate is so important. It allows you to see a common ground comparison between all giving providers.

Simply put, if your church’s effective rate is 4% or higher, you are overpaying. If it is 3% or higher, you could be doing better. And if it’s in the 2’s, you are in great shape.

Red Flag #3: No volume-based discounts

Hopefully, your church is in the 2% range, but if not, don’t lose hope. There are a few things you can do to ensure your ministry gets to keep as much of your donations as possible. First, if you are shopping around for giving providers, make sure to get clarity about each company’s effective rate (remember, it’s not the same as the processing rate). A great question to ask is, “If John donates $100 to our ministry with his debit card, how much of that $100 will end up in our bank account after all fees are taken out?”

In addition, it’s always great to ask if the giving provider offers any volume-based discounts. The more donations you receive, the less you should be paying. See what competitive incentives giving providers are willing to offer. If you already have a giving provider and find that your church is currently paying too much, call them and inquire about getting a lower rate. You can use our cheat sheet above for reference.

What to know more about hidden fees in church online giving?

There are many hidden fees surrounding online and mobile giving providers. It’s complicated and somewhat hard to understand. If you’d like to know more about online giving fee structure and how you can ensure that your church is obtaining all the funds it can to apply to ministry (instead of hidden fees) check out our free guide: Hidden Fees Exposed.