When you have your own merchant bank account, donated funds are transferred to your account as soon as the donor’s credit card clears -- usually one to three business days.

Aggregators are more expensive than having your own merchant bank account. Most aggregators’ business model is to charge their clients a flat percentage of the transaction. What most campaigns don’t know is that the credit card companies charge the aggregator much lower rates and these rates are based on the type of card being processed. 

Dealing directly with the merchant bank creates total transparency between you and your online processing costs. When you have your own merchant bank account, you pay the per-donation transaction costs directly to the merchant bank based on the types of cards your donors use. The merchant bank will give you a report of all transactions and the true fees for each one of those transactions.

The other huge upside to this is that your treasurer can easily see what your committee’s true costs are for processing donations, which makes FEC and state compliance filings much easier.

You lose control of donor chargebacks. One of the best Federal Election Commission and state election compliance practices is for campaign to manage the chargeback process. We recommend that chargebacks are paid to donors with a physical check from the committee. This allows a staffer who is knowledgeable in treasury and compliance to best determine if a chargeback should be issued, challenged or refunded. 

In many cases, it is more profitable and easier for the aggregator to complete the chargeback themselves. This can create a reconciliation nightmare for your treasurer. Did the aggregator report to your treasurer:

•    That the donation in question actually took place.

•    That they processed a chargeback.

•    When the chargeback was completed. 

•    How much are they going to charge you for completing the chargeback?

Chargebacks completed through an aggregator can lead to no end of compliance busy work and bad campaign finance data. When you have your own merchant bank account, you have total control over your chargeback processes.

Aggregators are often not familiar with Federal Election Commission or state donor requirements. Last cycle we had a number of clients who processed campaign contributions with Square, which is a devise that attaches to an iPhone or iPad that allows the fundraiser to accept a credit card payment via a card swipe. Square is an aggregator, and, unfortunately, they don’t request employer, occupation, or contact information for processing a political transaction as required by the FEC.

Our Square-using candidates ended up returning tens of thousands of dollars (and spending weeks attempting to track down donors) because they were unable to collect the proper donor information for the transaction. In many instances the donor’s first name was not even collected.

We’ve seen this same situation when campaigns have tried to implement non-political aggregator donation forms on their website. PayPal and Google Shopping cart don’t know the federal or state donor requirements or gift limits. When you have your own merchant account and utilize a political specific donation form, you can assure yourself of maintaining FEC and state compliance.

Tags: Fec