3 Ways to Shield Your Nonprofit From Debanking

Nonprofits face an uptick in debanking amid the current sociopolitical climate. Debanking occurs when a financial institution terminates an organization’s transaction processing due to perceived financial, regulatory, reputational or legal risk, often influenced by hot-button political issues.

This trend poses significant risks for nonprofits that rely on automatic, recurring donations. The discontinuation of transaction processing services can disrupt donations while the organization searches for a new payment processor, sometimes taking weeks to resolve. 

To add to the chaos, it can take several months — and often legal action — to force the original processor to transfer the payment tokens (i.e., data that represents sensitive information, like credit card numbers) to the new vendor. 

While debanking remains a critical issue for nonprofits, ownership over your payment tokens can alleviate risk and help you stay in control of your organization’s financial well-being. 

In your payment ecosystem, various players from your bank to your payment processor can influence the decision to debank your nonprofit. Without ownership of your payment tokens, transferring them to a new processor following a service termination is daunting and costly, severely disrupting cash flows for day-to-day operations. 

Fortunately, there are payment technologies that enable you to own your tokens, including tokenization, which secures cardholder data by anonymizing it as a random string of characters. By adopting vendor-agnostic solutions, your tokens remain functional and interpretable by any new processor. So, when you switch providers, the new system can detokenize your tokens into usable payment data, helping you stay funded and functional — even in the unfortunate event you experience debanking.

1. Avoid Vendor Lock-in

If your organization is debanked, you have a short window to secure a new processing provider. Processors can terminate your contract with less than a month’s notice, placing all new donations into a reserve that may be inaccessible for months. 

The impact of this type of disruption makes it crucial to work with multiple payment processors and technology providers. While some processors offer tokenization, point-to-point encryption (P2PE) and gateway services at low or no cost to generate processing revenue, these all-in-one packages raise a major red flag. 

Free or inexpensive solutions are not typically validated by the Payment Card Industry Security Standards Council (PCI SSC). The use of solutions that aren’t PCI-validated increases your risk of data breaches and financial loss because they may not meet industry standards for security. As you vet vendors and solutions, remember that if an offer seems too good to be true, it probably is. 

2. Search for Vendor-Agnostic Solutions

Vendor-agnostic technology is crucial to ensuring compatibility with various payment processors. For example, many vaultless tokenization systems allow you to work with token providers that are separate from your payment processor. This setup makes it possible to switch between processors without the need to retrieve card or token data from the original provider. 

Similarly, it’s smart to search for vendor-agnostic P2PE keypads — the technology used to secure card data at the point of sale. Many large NPOs use these encrypted keypads to securely enter card data as they collect it over the phone in contact centers. 

Agnostic P2PE keypads are compatible with any processor, even if they are initially set up with another’s encryption keys. This flexibility eliminates the need to replace or reconfigure keypads in the event of being debanked, which is both costly and time-consuming. 

3. Consider Tech Integration Logistics and Cost

If you don’t own your tokens, you must re-integrate your websites, card terminals and other payment acceptance channels for donations to a new processor if you are debanked. Although there are expenses associated with technologies, like tokenization and P2PE, the cost of debanking far outweighs these investments. 

You can also manage technology costs by negotiating with providers to tailor the pricing structure to your specific needs. For example, you may prefer to pay a per-transaction fee versus a monthly or flat fee based on your transaction volume. The key to managing the cost and integration of secure payment technologies is selecting the right partner. 

With a wide range of tokenization solutions and P2PE systems on the market, consider partnering with a provider with deep expertise in these technologies as well as the unique challenges and needs of the nonprofit sector. An effective partner can help you identify solutions that streamline your efforts. For example, using independent payment gateways that are compatible with various major processors avoids unnecessary integration work. 

As debanking continues to pose a significant threat to nonprofits, it’s crucial to mitigate risk through strategic partnerships and technology investments. With modular technologies you can insert into the payment flow of any payment processor, you can pivot quickly to maintain financial resilience if you experience debanking. This flexibility empowers you to preserve business continuity while focusing on your core mission, even if you’re forced to transition vendors with little notice. 

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.