Why Digital Payment Methods Improve the Donor Experience

Nonprofits seeking donations want to make the giving experience as easy and pleasant as possible for donors. People want to feel good when they give, and a big part of the giving experience involves the payment process.

Some supporters are most comfortable donating with a traditional method of payment such as cash or writing a physical check. But more and more, people are drawn to digital payment methods.

What is digital payment?

Digital payments include bank transfers and instruments such as credit, debit, and prepaid cards - methods that have been around for decades and even longer.

More recent methods of digital payment include digital wallets and peer-to-peer payments. Used on a connected device, a digital wallet is an application that holds payment information such as credit cards, gift cards, and bank account information. When accessed on a cell phone, a digital wallet is called a mobile wallet. Peer-to-peer (P2P) payment solutions let you send or receive money to or from another person by transferring funds from one account to another. Some apps like PayPal and Apple Pay can work as digital wallets and peer-to-peer payment systems.

Digital wallets and peer-to-peer use are increasing.

The past few years have seen a significant increase in the use of digital wallets and peer-to-peer payments, and with good reason. The uptick reflects the tremendous effect of the pandemic on spending habits. With less in-person shopping, people stopped using cash, and that pattern has continued. Today, it’s common for people to leave home without cash and rely instead on a digital wallet.

A recent survey from McKinsey showed more than 9 out of 10 respondents use digital methods of payment, indicating rising adoption of these methods. And a study by Forbes Advisor reports that 51% of those responding refuse to purchase from vendors that don’t accept digital wallet payments, with the percentage much higher among younger consumers. Clearly, digital payment is on the rise.

People who are comfortable paying digitally are comfortable giving digitally as well. It makes sense for charitable organizations to adopt modern digital payment methods given their increased use and potential impact on fundraising.

Why do people choose digital wallets and peer-to-peer payment methods?

The chief reasons people give for using digital payment methods like digital wallets are convenience, trust, and security.

People want to use convenient payment methods that are most familiar and fit their lifestyle. Many prefer the speed and ease of paying from a phone app to the hassle of having to hunt for a physical card. Some appreciate an app that prefills their information and saves time and keystrokes.

Younger donors are especially attracted to digital payment methods. According to PYMNTS, 79% of Gen Z consumers and 67% of millennials use digital wallets.

For nonprofits, the convenience of digital payment reduces friction for donors and enables faster checkouts. This lessens the chance that donors will get frustrated and fatigued along the way and abort the payment process resulting in a lost donation.

In an age of double and triple authentication, users demand a high level of trust and security from their digital wallet providers. According to the McKinsey survey, 69% of respondents cite trust and security as the key determining factors in choosing a digital wallet provider. That’s not surprising with the ever-present threat of data breaches and identity theft.

It follows that nonprofits need to choose trusted solutions with proven security to put their supporters at ease. When people donate, they want to be sure their gifts will reach the intended recipients with no hiccups. Charitable institutions want to choose reputable solution providers so contributors will trust their transactions are safe and secure.

Which digital wallets should you support?

Once you have decided to accept digital wallet payments the research begins. How do you determine which solutions are right for your organization? You want to accommodate your donors and at the same time, you want to minimize costs, disruption to systems and staff, and ongoing tracking of payments.

The best approach is to choose the solutions that are most likely to be used by your constituents. Do some ad hoc research by asking supporters what digital wallets they use. Consider sending out an email to conduct a poll. Find out which cell phones they use and ask if they prefer a solution that will work on both Android and Apple devices.

Next, take stock of your organization’s digital infrastructure. Find out what your organization’s website will support without customization. Web hosts such as Wix and GoDaddy have built-in payment gateways that enable to you receive digital wallet payments. These may entail additional monthly and transaction fees. If your website does not support digital wallet payments, you may need to work with IT specialists and your payment processing service to accept digital wallet payments.

Some of the most popular digital wallets are PayPal, Apple Pay, Samsung Pay, and Google Pay (now called Google Wallet). Here’s a look at these solutions:

Apple Pay: In 2023, Apple shipped more cell phones in the United States than any other manufacturer. With so many iPhone users out there, it’s likely a good number of them use Apple Pay as their digital wallet. According to Capital One, 52% of digital wallet users in the United States use Apple Pay. If your many of supporters use Apple devices such as iPhones, iPads, Apple Watches, and Macs, you should consider offering this payment option. Apple Pay is regarded as secure and easy to use for those familiar with the iPhone interface. Users store their card information in an app called Apple Wallet. At the point of purchase, the user selects their preferred card for the payment. Apple Pay is free for businesses and nonprofits, except for credit card fees and payment processing services fees. 

Google Pay: Many people use this app. In fact, according to Forbes Advisor, of the 53% people using digital wallets more frequently than traditional payment methods, it is the second-most popular digital wallet. Google Pay is supported on most Android devices, easy to use, and works very much like Apple Pay. Payment information like credit and debit card credentials are stored in Google Wallet and accessed with the app at the time of purchase. But Google has announced that Google Pay will no longer function as of June 4, 2024, and is encouraging users to switch to Google Wallet. Organizations that were planning to support payments by Google Pay should instead look into Google Wallet.  

PayPal: In 2023, 69% of digital wallet users in the United States used PayPal, making it by far the most popular digital wallet platform. PayPal’s prevalence is due in part to its ability to work on both iOS and Android devices. Another reason for PayPal’s success is its wide acceptance by online merchants from Walmart to Esty. While PayPal charges fees both to businesses and customers, the fees for nonprofits are discounted. The broad reach of PayPal may make it a good fit for your organization.

Samsung Pay: This digital wallet works on Samsung devices using Android 5.0 or higher. With Samsung the second-most popular cell phone brand in the United States, Samsung Pay is worth considering. Like other solutions, it works with a wallet app that stores credit card and banking information. Samsung Pay is supported by many banks and credit unions, as well as many retail establishments such as American Eagle, Gap, Office Depot, Target, and Best Buy. There are multiple security features in place in Samsung Pay. If many of your constituents are Samsung loyalists, consider supporting Samsung Pay.

When in doubt, outsource.

Maybe your organization is not ready to take the digital wallet plunge. Instead of taxing your operations to accept digital wallet payments, a good alternative is to test the waters by engaging services that already do.

If you have an event coming up, consider using a reservation service like Eventbrite, which accepts digital wallet payments. For major campaigns, consider using a crowdfunding platform like GoFundMe or Indiegogo. Keep in mind that not all platforms are the same. Choose one that accepts payments from the digital method your constituents are most likely to use. Remember that crowdfunding platforms will likely charge transaction fees that will cut into the funds you raise, but it may be worth it to engage the donors you seek.

As with any choice you make regarding your operations, always keep in mind how deciding on a digital payment method fits within the organization’s overall strategy and how it helps you engage your key audiences.

Audrey Merwin is a communications professional directing social media for Impacting Nonprofits LLC, a fractional CFO and financial consulting firm serving nonprofits.