Its is really quite simple math. Here is a good example.
Calculating the donations that a Nonprofit Organization would receive is very simple and straight forward. The calculation below is for a typical example based on industry average rates and fees. Keep in mind that $10,000 in processing volume is not even a drop in the bucket for the total volume of credit card transactions in the US. See below for some staggering and exciting statistics that make Payline Giving so powerful.
For simplicity, let’s look at the following example: $10,000 total processing volume with an average of 2.5% total processing fees (net effective rate) = $250 (Actual numbers will vary depending on how each merchant account is structured and priced.)
- 2.0% is for Interchange (Visa/MC/Amex/Disc & Bank fees) = $200
- 0.5% is for Payline Revenue (OH & Fees) = $50
- 10% of Payline Total Revenue (0.5%) or 0.05% = $5
Bottom Line: For every $10,000 in volume, $5 is donated back. This sounds like a pretty small donation, but it becomes very powerful with larger volumes from multiple business supporters.
So why is this so powerful? Consider the scope of the credit card market.
Credit cards play a vital role in the modern economy. They help provide liquidity–the convenient and timely access to capital that facilitates day-to-day transactions. Capitalism could exist without credit cards, but only at a much slower pace.
How extensive is the role of credit cards in modern society? Consider the numbers from the infographic above:
- The U.S. Census Bureau estimates that there are 181 million credit card holders in the United States. This represents approximately 77 percent of the adult population of the U.S.
- According to Census Bureau estimates, there are more than 1.4 billion credit cards currently in circulation in the U.S., whose 2010 population is roughly 308.8 million.
- These figures mean that there are about 4.5 credit cards for every man, woman and child in the United States, or an average of 7.7 credit cards for each of the 181 million people who actually hold credit cards.
- The Federal Reserve reports that credit cards are used more than 20 billion times a year in the U.S., with the total value of these transactions at about $1.9 trillion.
- Based on the number of transactions and the number of credit card holders, the average card holder uses a credit card 119 times a year, for transactions averaging $88 apiece. This comes to an average annual total of about $10,500 in credit card purchases.
In all, annual credit card purchase volume is equivalent to 12.9 percent of U.S. Gross Domestic Product. According to the Bureau of Economic Analysis, the 2010 U.S. Gross Domestic Product was $14.7 Trillion dollars.
So what is the impact of Payline Giving?
If every business in the U.S. were to switch to Payline Data, the donations through Payline Giving would total $950,000,000 based on our example above. Yep, you read that right, those zeros are correct. That would be $950 MILLION in donations. Of course, this is being a little overzealous on our part so maybe we should put it in a more realistic perspective.
The average small business in the retail and services industries have a total revenue of approximately $6 Million per year according to the U.S. Small Business Administration. At an industry average of 32% of revenue generated with credit cards as a means for payment, that means $160,000 per month in processing, which would generate $80 in donations per month. Now, with 10 businesses to support your cause, that is $800 a month. It is reasonable that most charitable organizations utilizing Payline Giving will actually have at least 25 business supporters. Achieving these numbers could result in $2,000 per month in residual donations.
Payline Giving vs Typical Individual Donor
According to US Giving the average donation from an individual is $1800 over a 5 year period.
Using Payline Giving, a single business would produce $4,800 in donations over the same time period, and they are residual so there is no required follow up to receive these donations. That is 2.5 times the donations from an individual supporter.
Important Note to our Non-Profit Partners.
Non-Profits can elect to receive donations from their own merchant account for their processing just like any other business supporter. Is there a problem with this? Nope! Payline is technically making the donations, so when you set up your merchant account and select your own non-profit as the beneficiary, you will not risk your non-profit status. You will simply be receiving another donation from Payline, but this time the donation is enabled by your commitment to use Payline Data’s services. To be completely honest though, these donations will likely be small as we give preferred pricing to our Non-profit partners that choose to use Payline’s services. The real benefit is the cost savings versus your current merchant account rates. The donations will come from the collective donations made possible by the businesses in your Supporter Network.
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