How Donation Processing Fees Actually Work

Every online donation carries a processing fee. It's easy to gloss over because it's a small percentage, but it's worth understanding exactly where that money goes and who ends up paying it, because the answer changes depending on the platform.

There are two fees, not one

The first fee is the payment processor's cut, Stripe, PayPal, and similar services all charge a percentage plus a small fixed amount per transaction. This fee exists regardless of what donation platform you use; someone has to move the money from a donor's card to a bank account, and that service isn't free.

The second fee is the platform's own cut, on top of the processor's. This is what you're actually paying for the software: the donation form, the receipts, the donor records, the dashboard. Some platforms bundle this invisibly into a single "processing fee" line; others show it separately.

Who pays it

There are two common patterns. In one, the fee is deducted from the gift before it reaches your account, so a $100 donation nets you something less than $100. In the other, the donor is shown the fee before they complete the gift and can choose to cover it, so a $100 donation nets you the full $100 and the donor pays a little extra.

Neither pattern is inherently wrong, but they produce very different numbers on your side, and donors generally prefer being asked rather than finding out later that their gift was quietly reduced. If a platform doesn't show the fee to the donor before checkout, that's worth asking about directly.

Questions worth asking any platform

A few things are worth confirming before you commit to a donation platform, regardless of which one you're evaluating:

• Is the fee shown to the donor before they complete the gift, or deducted afterward without them seeing it?
• Does the fee change based on payment method, a credit card typically costs more to process than a bank transfer?
• Is there a separate platform fee on top of the processor's fee, and is it disclosed as a flat rate or does it vary?
• What happens to the fee on a refunded or disputed gift, do you get it back?

Why this is worth caring about

None of this is about finding the cheapest possible option. A slightly higher fee on a platform that actually does what your organization needs is a better deal than a slightly lower fee on one that doesn't. But donors and board members do ask where the money goes, and "I'm not sure how the fees work" is not a comfortable answer to give. Knowing the mechanics, not just the headline percentage, is what lets you answer that question plainly.