Every giving platform has a fee. Some fees are fair. Some are fair-sounding numbers that hide a second layer of markup you never agreed to. If you process $200,000 per year in gifts, the difference between pass-through pricing and a marked-up platform can be $4,000 to $10,000 per year leaving your mission and going to a software company instead. Understanding the anatomy of a transaction fee takes about ten minutes and saves real money.
The components of a transaction fee
When a donor gives $100 online, several parties take a cut before the money lands in your account. The total deduction is not one fee. It is a stack of fees from different entities, and the way a platform presents these to you tells you a lot about whether they are being straight with you.
- Interchange. This is the fee paid to the card-issuing bank (Chase, Bank of America, etc.) for the risk and infrastructure of extending credit. Interchange rates are set by Visa and Mastercard and are publicly available. They vary by card type: consumer debit is cheaper than premium travel rewards credit cards. A typical blended interchange rate for nonprofits is 1.5 to 2.2 percent.
- Card network assessment. Visa and Mastercard charge a separate small fee for their network infrastructure, typically 0.13 to 0.15 percent of the transaction. This goes to the card brand, not the bank.
- Processor markup. The payment processor (Stripe, Braintree, etc.) adds their margin on top of interchange and network fees. Stripe’s standard published rate for nonprofits is 2.2 percent plus $0.30. This already includes interchange passthrough at Stripe’s scale.
- Platform fee. This is the giving platform’s fee: the software that provides the giving page, donor portal, recurring gift management, and reporting. This is a separate layer on top of the processor fee.
The total cost of a transaction is the sum of all four layers. The problem is that many giving platforms bundle these together into a single percentage and do not show you the breakdown. A platform that says “we charge 3.5 percent” might be passing through 2.2 percent in Stripe fees and keeping 1.3 percent as their own margin. Or they might have negotiated lower processor fees and be keeping a larger spread. Without the breakdown, you cannot tell.
Pass-through pricing vs. marked-up pricing
Pass-through pricing means the platform charges you the actual processor fee at cost and adds a transparent, separate platform fee on top. You know exactly what goes to the processor and exactly what goes to the platform. Marked-up pricing means the platform quotes you a single blended percentage that includes their margin baked in, with no visibility into the underlying processor cost.
| Scenario | $100 gift | $500 gift | Monthly on $20,000 volume | Annual on $200,000 volume |
|---|---|---|---|---|
| Pass-through: 2.2% + $0.30 processor, plus $15/mo platform fee | $2.50 fee, $97.50 nets | $11.30 fee, $488.70 nets | $440 + $15 platform = $455 | $5,280 total cost |
| Blended markup: 3.5% flat | $3.50 fee, $96.50 nets | $17.50 fee, $482.50 nets | $700 in fees | $8,400 total cost |
| Blended markup: 4% flat | $4.00 fee, $96.00 nets | $20.00 fee, $480.00 nets | $800 in fees | $9,600 total cost |
| Pass-through + donor covers fee option | Donor pays $102.60, org nets $100 | Donor pays $511.80, org nets $500 | Near-zero net cost if donors opt in | Depends on opt-in rate |
On $200,000 per year in giving, the difference between a 2.2 percent pass-through model and a 4 percent blended markup is $4,320 per year. That pays for staff time, a program, or two years of a software subscription. It is not a rounding error.
The real cost of "free" platforms
A number of giving platforms advertise as free to the organization. No monthly fee, no setup fee. The transaction fee is often presented as covering everything. This model is not inherently dishonest, but it deserves a clear-eyed read.
A free platform that charges 4 to 5 percent per transaction is less free than a paid platform that charges $50 per month plus 2.5 percent. Break the math on your volume. At $10,000 per month in giving, 4 percent costs $400. A $50 platform fee plus 2.5 percent costs $300. The “free” option costs $1,200 more per year.
- Tip prompts to the donor. Some platforms add a “support this platform” tip prompt to the donor checkout. Donors who feel pressured to tip to fund the platform are being asked to subsidize the org’s software choice. That prompt can reduce donor trust and completion rates.
- Delayed payouts. Free platforms sometimes fund their operations partly through float: holding your funds for 3 to 7 days before disbursing. On a $50,000 capital campaign, that is a week of working capital sitting somewhere else.
- Feature gating. The free tier often lacks recurring gift management, custom branding, donor portals, or reporting. When these features are on a paid tier, the “free” platform is actually a funnel to a subscription.
- Lock-in through donor data. If the platform owns the donor records and does not offer export, you are building a constituency you cannot take with you if you leave. Ask every platform: who owns the data, and can I export all of it at any time?
Recurring giving and the donor experience
For churches, nonprofits, and missions organizations, recurring giving is the most important category of transaction. A donor who sets up a monthly gift is worth 7 to 11 times the value of a one-time donor over a three-year period (based on median nonprofit donor retention data from the Fundraising Effectiveness Project). Anything that creates friction in the recurring giving setup or management experience is directly reducing your most valuable revenue stream.
- Card update automation. When a donor’s card expires, the platform should automatically attempt to update the card via Visa/Mastercard’s Account Updater service before the gift fails. Platforms that do not have this require donors to manually update cards, and many do not. A failed recurring gift that is not recovered has an 18 to 25 percent lapse rate.
- Donor self-service portal. Donors should be able to log in and view, pause, or modify their recurring gift without calling your office. Every call to change a recurring gift is 5 to 10 minutes of staff time that does not need to happen.
- Retry logic on failed gifts. A smart retry schedule (24 hours, 3 days, 7 days) recovers a meaningful percentage of failed gifts caused by temporary card decline. A platform that gives up on the first failure leaves recoverable revenue on the table.
- Donor-covers-fee option. Many donors are willing to add a small amount to cover the processing fee if asked clearly. This is not the same as a tip prompt. A clear, optional “add $2.60 to cover processing fees” checkbox typically sees 40 to 60 percent opt-in, meaningfully reducing your net cost.
- End-of-year giving statements. Donors need annual statements for tax purposes. A platform that generates and emails these automatically saves significant staff time in January, which is already a busy season for nonprofits.
What to ask every vendor
Before signing with any giving platform, get answers to these questions in writing. A vendor who cannot or will not answer them is telling you something.
- What is your processing fee, and what does it include? Ask for the breakdown: processor cost, network assessment, and platform margin. If they give you a single number and cannot break it down, they are charging a markup they would rather you not calculate.
- Do you have nonprofit or church discounted rates? Stripe, Square, and most major processors offer reduced rates for verified 501(c)(3) organizations. These are published rates, not negotiated favors. If a platform does not pass these reduced rates to you, ask why.
- Who owns my donor data and can I export it completely? You should own it and the answer should be yes. Ask for a sample export file. If they hedge, that is a data lock-in strategy.
- What is your payout schedule? Same-day, next-day, or two-day payouts via Stripe are standard. If a platform holds funds for more than 3 business days without a clear reason, ask about the model.
- How do you handle failed recurring gifts? Ask specifically about Account Updater, retry logic, and what notification goes to the donor. A vague answer here is a red flag for a platform that will cost you recurring revenue.
How Studio Give approaches fees
Studio Give is built on Stripe Connect, which means organizations connect their own Stripe account and receive pass-through Stripe pricing (2.2 percent plus $0.30 for nonprofits with verified status). Studio adds a small platform fee on top of that for the giving page, donor portal, recurring gift management, and reporting layer. The two components are shown separately so you always know what is going to the processor and what is going to the platform.
Because each organization connects its own Stripe account, funds settle directly to that account on Stripe’s standard payout schedule. Studio does not hold funds. There is no float model. Donor data lives in the Studio workspace alongside the rest of your contacts, and you can export it at any time.
Key takeaways
- A transaction fee has four layers: interchange, card network assessment, processor markup, and platform fee. Understanding each layer lets you evaluate whether a quoted rate is fair.
- On $200,000 per year in giving, the difference between a 2.2 percent pass-through model and a 4 percent blended markup is over $4,000 per year.
- “Free” platforms are often more expensive than paid platforms once you do the math on your volume. The variable is the percentage, not the monthly fee.
- Tip prompts, float-funded payouts, and feature gating are the three most common ways “free” platforms recover their costs at your expense.
- Recurring giving is worth 7 to 11 times a one-time gift over three years. Card updater, retry logic, and self-service portals directly protect that revenue.
- Ask every vendor to break down fees, confirm data ownership and export, explain payout timing, and describe how they handle failed recurring gifts.
Common questions
Can we really get 2.2 percent rates as a small nonprofit?
Yes. Stripe’s published nonprofit rate is 2.2 percent plus $0.30 for verified 501(c)(3) organizations, regardless of volume. You do not need to be large to access this rate. Verification requires submitting your EIN and nonprofit determination letter through Stripe’s dashboard.
Should we ask donors to cover the fee?
It depends on your donor base and your culture. Research suggests opt-in rates of 40 to 60 percent when the fee coverage option is presented clearly and optionally. Forced fee coverage (the fee is added unless the donor unchecks a box) tends to generate donor complaints and reduce trust. Offer it, make it easy to opt out, and do not imply the organization cannot afford the fee.
What about ACH giving? Is it cheaper?
ACH (bank transfer) transactions typically cost 0.8 percent capped at $5.00 via Stripe, compared to 2.2 percent for cards. For large gifts, ACH can save meaningfully. The tradeoff is that ACH payments take 3 to 5 business days to settle and have a higher failure rate due to account number errors. Offering both options and nudging large donors toward ACH is a reasonable strategy.
How does international giving affect fees?
International cards carry a 1.5 percent cross-border fee on top of standard rates. Currency conversion adds another 1 percent. If you receive significant international giving, consider whether a local payment method or a currency-specific gateway makes sense for those donors.
What is Stripe Connect and why does it matter for giving platforms?
Stripe Connect is the API layer Stripe provides for platforms that process payments on behalf of other businesses. When a giving platform uses Stripe Connect, each organization has its own Stripe account and funds settle directly to them. When a platform uses a single Stripe account for all customers, they hold the funds and disburse them. The first model is more transparent and eliminates the platform as a counterparty risk on your funds.
