Part two of a two part series
In part one of "The Trouble With Credit Cards", we shared the ugly math of credit cards and true costs to your scrip program. We showed you how typical merchant fees can consume almost 40% of the average scrip program's profit. And we showed you how families who purchase low margin gift cards with credit cards can even cause you to lose money!
Tough choices
The question you should be asking yourself is "what does my organization get in return for the cost?" Will credit card payment entice more families to buy scrip?
Almost always. Will the added business create a net revenue increase? That's a lot less likely.
Some non-profit organizations apply a surcharge for credit card purchases, or calculate different rebate amounts for credit card purchases. Bad idea. Visa/Mastercard merchant agreements specifically prohibit surcharges of any kind.
Also, at the time this article was written, the following states prohibit merchants from adding surcharges to credit card transactions: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. The bottom line is credit card surcharges violate your merchant agreement, and may be illegal in your state.
What's The Point?
Sometimes it's worthwhile to step back and examine the reasons you have a scrip program to begin with. Is it to give your families another way to earn free airline tickets, or is the main objective to help your non-profit in their mission?
Of course, you know what's best for your own scrip program. But even though credit cards may generate more volume for you, the added sales volume probably won't offset the added expense.
The staffers here at GLSC suggest another strategy: rather than trying to figure out how to make credit cards work for your scrip program, work on a marginal increase in family involvement. Most healthy scrip programs typically only have 20% to 30% of the families participating.
Let's say your school or church has 20% of their families regularly participating in scrip. If you can get that number from 20% to 22% - a very reachable goal - that 2% participating increase nets out to a 10% increase in scrip program revenue!
GLSC offers promotional tools to help you do that - just follow the link on coordinator dashboard. In the meantime, you've got to have some information to help you educate your member families when they ask for credit card privileges.
Try These Talking Points
When your families ask for credit card payment, help them understand why credit cards are a bad deal. Here are a few talking points to help you explain why credit cards don't mix well with scrip programs:
"Credit card fees are a great deal for the bank, but a bad deal for our non-profit. On average, 40% of our profit goes away with credit card transactions. That means our organization is paying for your airline miles and rebates."
"I realize it's important for you to earn airline tickets and rewards. But that's not the objective of our scrip program. We're trying to help our organization raise money, but credit cards make that very, very difficult."
"Our retailers are partners in fundraising with our non-profit. Essentially, they give us money in exchange for shopping with their gift cards. Gift cards help the retailers avoid credit card fees - let's help the retailers who are helping us by using gift cards and not credit card companies"
Don't Forget ShopWithScrip and PrestoPay™
As a scrip program coordinator, the payment options at your disposal are limited. You have cash, you have checks and you have credit cards (bad idea). Maybe you're one of the thousands of GLSC non-profits who are using ShopWithScrip.com. If so, you can offer your families another payment option instead of credit cards. It's called PrestoPay™, and it lets your customers pay for their scrip purchases with a secure electronic check transaction.
Remember, when a customer asks about credit cards, it's an opportunity for you to educate and inform. Give them the facts!
©2008 Great Lakes Scrip Center, LLC