I know you have lots on your plate as we near year-end.

But if you have monthly sustaining donors or any type of installment givers, please add this data processing/payment processing morsel to your ‘Urgent: To Do’ list.

In response to the rising tide of credit card theft and fraud over the past few years, American credit card providers are in the process of issuing a wave of (an estimated 100 million) replacement cards.

These replacement cards — with new expiration dates — could negate the credit card payment data your already have on file for monthly sustaining donors and other installment givers.

The new cards, using a ‘chip’ technology that’s been in place in Europe for a decade or so, pose the same problems for nonprofits that any change in expiration date or account number poses. If your payment system relies on information from the old card, the monthly giver’s transaction will be rejected. When that occurs your organization has to get updated credit card information and then re-process the contribution.

The year-end problem springs from the timing and volume of old cards being replaced with the new chip technology. According to the Chronicle of Philanthropy, “with so many cards changing this fall, charities haven’t planned ahead and may find themselves losing out on lots of money.”

Steve MacLaughlin, Blackbaud’s Director of Analytics, warns that organizations with large recurring-gift programs should pay special attention to this development. He notes: “If an organization has taken shortcuts along the way or hasn’t automated a lot of the work [payment processing/credit card updating] along the way then this is going to be painful.”

How painful?

Well, in the commercial world this change has adversely affected even the most sophisticated marketers. In October Netflix attributed an extraordinary drop in third quarter subscribers to “involuntary churn” caused by the large number of replacement cards.

Vigilance Please

For many nonprofits — especially those with substantial sustainer programs — there’s big money at stake in this flurry of credit card replacement during the year-end giving season.

Most organizations have but two choices to deal with the problem — do it yourself or subscribe to a credit card updating service:

• Design a procedure inside your organization to detect failed transactions, then make it easy for the donor to correct the problem. And be especially alert to any processes you already have in place that cancel donors’ payments automatically and require the donor to take additional action to restore the payment. That process is a sure money loser.

• For nonprofits using Blackbaud CRMs, that company has a service called Credit Card Updater that its customers can use. Raiser’s Edge users can get more details here. Those organizations using Luminate Online will find information here.

• Payments specialist Braintree also provides automated credit card updating. Learn more about this service here.

To further complicate your life, if your nonprofit also runs a retail operation or accepts in-person donations via credit card, you’ll have to have credit card devices capable of reading the new chip cards or the organization will be held liable for any repaying the cost of any fraudulent charges.

Take a moment today or tomorrow and call your CRM or data and/or payment processor to find out what steps you should be taking to make sure those recurring payments keep rolling in uninterrupted.

Are you prepared?

Roger

P.S.  Today is National Philanthropy Day. Even if you’re not participating in one of the AFP’s many official celebrations, Tom and I hope you’ll do something special to mark the day. Perhaps a donation in honor of one of the unsung heroes in your donor service department … or a random act of kindness like slipping the barista at Starbucks $20 and asking her/him to treat the next three customers to a frappuccino on you. Enough said.