Apple Pay and Recurring Donations

We all love the ease with which we can tap our phones to buy groceries or pay a bill. Apple Pay has taken the consumer world by storm, making it faster and easier to zip through lines and pay for items quickly.

But it’s also gained popularity as a convenient way for donors to set up recurring gifts to nonprofits. While this seems like a streamlined way to simplify the donation process, recent data suggests that it may come at a high cost to nonprofits in the form of higher decline rates and increased difficulty managing sustainers.

The Apple Pay Conundrum

Nonprofits are adept at finding ways to make giving easy and are often focused on turning one-time donors into sustainers. When this includes accepting Apple Pay for those monthly gifts, you’re delivering convenience to your donors, but based on how Apple Pay operates, you’re running into three issues.

1. Tokenization Challenges: Apple Pay uses unique tokens that change every time a device is changed or the credit card is updated. This is terrific for security but makes it challenging for a system to recognize recurring donations from the same person.
2. Limited Visibility: When Apple Pay is used, payment processors like CharityEngine have little to no visibility into the raw credit card data. In a traditional credit card donation, we have access to the information and can assist with issues that arise, such as updating payment information.
3. Incompatibility with CAU: When Apple Pay is used for recurring donations, it’s incompatible with helpful tools that assist in more traditional transactions. An example is automated credit card updaters (CAU). These significantly increase the amount of revenue your nonprofit receives, and they cannot be used when Apple Pay is the payment method.

The Impact on Nonprofits

Not using CAU will impact your revenue. But what are some other side effects of offering this convenience to your donors?

Nonprofits can see higher decline rates because of the changing tokens and a payment processor’s limited visibility into raw credit card data.

If a payment is declined, nonprofits can have difficulty reactivating the donor because they can’t charge them until they collect new payment information. This, in turn, lowers your donor retention rates, and that lowers your overall fundraising revenue.

When nonprofit teams are required to manually contact donors for updated payment information, this can increase the administrative burden and the possibility of human error.

Every payment declined or donor who drops means a revenue loss, and these losses can multiply quickly and affect your ability to hit your fundraising goals.

Despite these significant challenges, some nonprofits still want to offer the convenience of Apple Pay for recurring gifts. Rightly so, they believe that an easy donor experience leads to more monthly giving signups, and they’d rather focus on mitigating the risk than losing potential donors.

Common Mitigation Strategies

If this describes your nonprofit’s philosophy, let’s examine some of the best strategies for mitigating the risk of offering Apple Pay for recurring donations.

1. Focus on sustainer reactivation: Use email automation to send declined donors a link to sign up again. However, don’t offer Apple Pay as an option, so they opt for more traditional credit card or ACH options.
2. Educate your donors: While you can offer Apple Pay, clearly communicate the risk of declines to your donors. Remind them of your mission and how critical ongoing support is, and urge them to choose a different payment option if possible. Sometimes, donors choose the easy and familiar Apple logo without realizing the potential consequences!
3. Monitor decline rates: Watch your decline rates with Apple Pay (watch your decline rates regardless! If you’re a CharityEngine customer, we’re watching them for you) and keep a close eye on the number of donors signing up versus the declines. Be prepared to shift strategies if offering Apple Pay is hurting your revenue.
4. Keep traditional options in focus: If you want to keep Apple Pay, ensure traditional payment options are prominent on your donation form. Consider offering only credit card and ACH payments for recurring donations and allow Apple Pay for one-time donations.

Don’t Let Convenience Cost Too Much!

It’s hard to argue with the convenience of Apple Pay and virtual wallets in general. They are perfect for different types of transactions. Accepting Apple Pay in a shopping cart for a one-time purchase makes a lot of sense and creates an easy donor experience.

But when it comes to recurring donations, nonprofits must consider the potential downside and balance the desire for new recurring donors with the likelihood of losing revenue, or at least having a difficult (and manual) experience maintaining it.

New technology, a lot of it powered by AI, is on the horizon. Critical thinkers will consider different situations and incorporate this tech carefully and strategically rather than blindly jumping on the newest and coolest bandwagons. Nonprofits must stay ahead of the curve, adapting to new technologies and anticipating their impact on donor behavior and fundraising outcomes (as well as organizational efficiencies).

At CharityEngine, we promise to shoot straight with you and share our thoughts on different topics of interest to the nonprofit community. There are many choices when you’re in the market for a new fundraising platform, and we always urge nonprofits to conduct research and find the perfect solution for their needs. If, though, you’re looking for a partner that will provide the knowledge and technology to help you engage donors and raise more money (in fact, only CharityEngine can help you keep at least 90% of your recurring revenue!), we’d love the opportunity to show you our platform and see what kind of results we can promise. Just book a quick demo! We’ll be ready for you.