Why PayPal, Rally.org and Square are bad for campaigns

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8 reasons why opening a merchant bank account can save you thousands of dollars


Processing political donations through PayPal, Google Shopping Cart, Square, Amazon or Rally.org can seem like the perfect solution for campaigns trying to raise a quick buck. All you need to do is give them your email address and bank information and they send you your money. Right?

Not so fast. These companies, called “aggregators” by the likes of Visa and MasterCard, set up a single credit card merchant account that they share among all their clients. Why would having aggregators processing your credit card donations be a problem? 

Here are eight reasons why you should consider having your own merchant bank account.

(Why aggregators are good for your campaign: A response from Rally.org’s Tom Serres)

You have no control over your funds. How can this be? The reality is that the aggregator doesn’t have to give you your funds until they deem the funds not to be a risk of fraud or not meeting all of their terms of service.  Legally, the funds that you thought were given to your committee are really controlled by the aggregator.  That means that if aggregator doesn’t distribute your funds to you, you have no quick recourse. 

We once saw PayPal place a hold on a client’s funds for six months because the campaign in question didn’t perfectly fit PayPal’s underwriting rules.

Your only recourse option is to sue the aggregator in civil court for damages which no campaign has time for.

Obviously, aggregators wouldn’t be in business long if they withheld funds from their clients, but if your aggregator decides that your have violated their terms or if your aggregator runs into cash flow challenges, you may never see all your donations. 

It's important to note that as a customer of an aggregator, if you do violate the terms of their agreement anytime, they can hold your funds indefinitely and without recourse.

When you have your own merchant bank account, your donated funds are your property as soon as the donor’s credit card clears.

You don’t receive your donations when the donor’s card is processed. You will receive your funds from your aggregator based on their terms. That could be as long as once a month, or once every two weeks or whatever arbitrary time period the aggregator decides upon.

There are other issues with you receiving funds only on your aggregators’ schedule. What about September, October or even November when the majority of your donations hit your website? Donations are the oxygen your campaign lives on. If you’re waiting around for your aggregator to disburse your funds before Election Day, how can you use those funds to win your race? We’ve seen many campaigns not receive their funds until after Election Day, which is often no help at all.


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