Electronic Donations - Current Status

[russellhltn]

Many organizations, including the Church, are not constrained by a shortage of good new ideas, but by a shortage of resources or dependence on legacy systems.

True, but in this case I wonder if it isn't a different problem outside of the control of the church. Currently, if I write a check for $100, the church gets $100. But what happens if I make a ePayment? I know a merchant doesn't get $100 if I use a credit card.

The answer may be different in different countries - which might explain why they have it and we don't.

[RossEvans]

True, but in this case I wonder if it isn't a different problem outside of the control of the church. Currently, if I write a check for $100, the church gets $100. But what happens if I make a ePayment? I know a merchant doesn't get $100 if I use a credit card.

I'm not sure that analogy fits. In the case of that credit card purchase, the bank is financing the purchase, if only temporarily.

As I understand it, the costs associated with clearing electronic payments tend to be structured as per-transaction fees, and perhaps a setup fee. So it probably isn't free. But then, I am not sure that when we drop off a plastic bag of paper checks at our local corrrespondent bank each week for immediate transmission to CHQ, that bank performs the service of counting and clearing the checks without any fees, either.

On balance, I think businesses find that using electronic payments is cheaper for them than paper transactions. I doubt that banks charge more for processing and clearing and electronic transaction than a paper one. (Although the Church benefits from the free internal labor of data entry by local finance clerks.) And charitable organizations find that it makes good sense to facilitate convenient ways for donors to send them money.

[russellhltn]

I'm not sure that analogy fits. In the case of that credit card purchase, the bank is financing the purchase, if only temporarily.

Yes, but that's not the issue I'm talking about. I'll just link to the Wikipedia entry.

As I understand it, the costs associated with clearing electronic payments tend to be structured as per-transaction fees, and perhaps a setup fee. So it probably isn't free.

Exactly.

But then, I am not sure that when we drop off a plastic bag of paper checks at our local corrrespondent bank each week for immediate transmission to CHQ, that bank performs the service of counting and clearing the checks without any fees, either.

I think the church "pays" for it by keeping a minimum balance in the account. That's how it works for personal accounts. If that's the case, then the church gets 100% of the tithing donated and only "pays" in "lost opportunity" cost for the money placed in the account. (I concluded a long time ago that it was far more cost effective for my personal account to eat the lost opportunity costs then to pay the bank fees.)

On balance, I think businesses find that using electronic payments is cheaper for them than paper transactions.

Different situation. Many merchants subscribe to a check guarantee service to prevent accepting bad checks. The church doesn't do that. If the check bounces, they just cancel the blessing. The church isn't out the cost of any merchandise.

As my link above shows, merchants DO pay for credit cards. They'd love to charge a surcharge for CC use, but the CC contract forbids that. They cope by either raising the price or depending on customers more willing to buy if they can use plastic. Neither situation works for the church. The "price" is set by scripture and the church isn't banking on "impulse purchase" to offset the costs. And as you note, labor costs are not an issue for the church.

And then there's the theological question of if the church only gets 99% of the tithing, has the tithing really been paid?

I really don't know the answer to why we don't having something in the US. But I wouldn't rule out the fee structure of the banking system. And on deeper thought, the issues behind creating a "secure store" are not trivial and could well mean that it's a resource issue. Out-sourcing that work would just lead us back to the fee structure issue.

It's interesting to note that you CAN donate on-line to the Humanitarian Aid here.

[marianomarini]

And then there's the theological question of if the church only gets 99% of the tithing, has the tithing really been paid?

The tithing is what we pay not what the Church get!

Anyway. In Italy we pay with (Bonifico bancario. I don't know how is named in English). So we tell to the bank to pay (we don't use Credit Card but Count to Count Transfert). This way no charge are apply to members, neither to the Church!

[RossEvans]

I think the church "pays" for it by keeping a minimum balance in the account. That's how it works for personal accounts. If that's the case, then the church gets 100% of the tithing donated and only "pays" in "lost opportunity" cost for the money placed in the account. (I concluded a long time ago that it was far more cost effective for my personal account to eat the lost opportunity costs then to pay the bank fees.)

I rather expect that what you are calling "opportunity costs" -- the interest value of holding funds -- is much different in the case of Church donations. It is certainly in the Church's financial interests to facilitate immediate receipt of members' donations instead of having them held by members or bishops until weekly batch processing occurs. I would think this very substantial amount of lost interest dwarfs whatever transaction fees would be incurred.

[russellhltn]

I rather expect that what you are calling "opportunity costs" -- the interest value of holding funds

Your right in that the Oppertunity costin this case is the interest that the church will not be earning on funds sitting in the account. (Note that this is a minimum balance of church funds deposited to the account. It's not donations.)

It is certainly in the Church's financial interests to facilitate immediate receipt of members' donations instead of having them held by members or bishops until weekly batch processing occurs. I would think this very substantial amount of lost interest dwarfs whatever transaction fees would be incurred.

I disagree. I think the transaction costs would exceed the few days interest. Do you have any numbers to back up your position? What is the typical transaction charge?

[RossEvans]

I disagree. I think the transaction costs would exceed the few days interest. Do you have any numbers to back up your position? What is the typical transaction charge?

I don't know the transaction charge, but I know it typically goes down steeply with volume. Which is one reason electronic payment arrangements tend to be set up by large organizations, not local mom-and-pop vendors. Like many services, the economics of scale work for the Church nationally better than locally.

The hard-dollar cost of sending a short message over the Internet is quite trivial. (See spam, for example.) And the technology is now pretty mature. So I just don't think the market would bear very large fees. Yet electronic payment systems are growing in popularity with private-sector payees, because the math works for them.

I have a good feel for the other side of the ledger as a finance clerk. Tithing and other donations amount to a substantial sum. And I think the users of such a service would tend to be the medium-to-larger donors on the distribution curve, so the per-transaction interest would tend to be on the high side of average. Calculate a few days' interest on more than 10 percent of your own income as an micro example of the annual benefit to the Church per donor.

Of course, the Fed Funds rate happens to be at historic lows right now, which works against the economics of electronic payments. If you believe interest rates will never go up again, then the case for these efficiencies is less compelling. Perhaps that uncertainity is one more factor affecting any decision on developing such a system.

[russellhltn]

I don't know the transaction charge,

Then we're just wildly speculating, aren't we?

The hard-dollar cost of sending a short message over the Internet is quite trivial.

Yes, but that's ignoring at least one major layer - the banking system. And any regulations that apply.

And there's still the theological issue of how to deal with traction charges on tithing.

Unless someone can show that there is a transaction charge-free way to do payments in the U.S., then I think my suggestion that the lack of a epayment system in the US may be due to the way the banking system is set up is a valid possibility.

I'm confident that the church is keenly aware of what's possible, and is in a far more knowledgeable position then you or I. The original reason that the church equipped each unit with a modem was to transmit the weekly deposit. (The use for membership records came much later. A couple of years later IIRC.) I seriously doubt if the current lack of epayment is due to ignorance of the benefits. And I'm also sure the Church will jump on it the moment it makes sense for them to do so.

Why it hasn't happened, I can only speculate. And I speculate that has something to do with the charges are structured in the US banking system. If you wish to speculate on a different cause, that's fine. But speculating that it's because the church simply isn't aware of the benefits (which seems to me to be the logical concussion of your line of logic) flys in the face of my limited experience in dealing with them.

[RossEvans]

Then we're just wildly speculating, aren't we?. .

Agreed. We both are. This is basically a fact-free discussion all around.

If you wish to speculate on a different cause, that's fine. But speculating that it's because the church simply isn't aware of the benefits (which seems to me to be the logical concussion of your line of logic) flys in the face of my limited experience in dealing with them.

I have not argued any such thing. To the contrary, if you read back to my earlier comment, the point I made in the first place was that whatever the benefits, quite possibly the reason no project is known to exist has to do with other development priorities and dependencies.

[russellhltn]

I think we're in agreement then. (Even if it's to disagree on some parts.)

It will happen when it makes sense (both from a practical and priorities standpoint) to happen.