Will innovations in payments technology increase charitable donations?
Charities may appear rather traditional in their fundraising efforts – with a large focus on cash and donating ‘small change’, it’s still common to see ‘chuggers’ in bright clothes in the street, asking passers-by to contribute to their cause.
But change is afoot. Since one entrepreneurial Big Issue vendor got an iZettle reader to take card payments back in 2013 , Oxfam and the NSPCC have both trialled contactless charity boxes, allowing busy shoppers and frustrated commuters to simply tap a card to donate – and taking away the possible excuse of having ‘no change’.
Contactless spending hit £25bn in the UK last year, a 223% rise on the year before. But this isn’t the only innovation that is helping people become more charitable.
Tap and help
There are two key aspects to the contactless payments craze: speed and convenience. With a quick tap, the friction of paying for something disappears (you don’t need to think about it) and, relatedly, you now have the ability to spend small amounts without needing, or feeling like you need, small change. When it comes to charity, every little helps.
And it works. Moneymailme research indicated that 72% of 18-25 year olds are willing to use mobile apps for charitable giving. During a trial last year, Barclaycard research showed that donations made via card payment were three times more than the average cash donation (£1).
Paulette Rowe, managing director of Barclaycard Payment Solutions, commented: ‘Feedback from the trial has been extremely positive; our charity partners told us the boxes were simple to use, adaptable to a variety of situations and vital in securing donations where it may not have been possible before.’
The UK Cards Association has been working on a project with a number of charities over the last couple of years to bring contactless donations to life. Soon, the Contactless Charity Donation Framework will be published so that all charities can take advantage of this new way of giving.
Briony Krikorian-Slade, Principal Policy Advisor at the UK Cards Association, told Mapa: ‘Contactless meets the donor’s needs of being as fast and anonymous as cash, and it gives people a choice in how they donate – card, mobile or wearable device. The majority of people have at least one contactless card, and early pilots have found that people are happy to give a higher contactless donation than they would typically give in cash. Contactless is based on globally recognised standards and a trusted security framework, so donors feel secure donating even if the charity’s device is unattended. We envisage several models for contactless donations in the future, involving both attended and unattended devices, both indoors and outdoors.’
It’s not just those familiar boxes getting primed for modern payments – expect shop windows, museums and galleries and maybe even tube ads to become donation devices. One Dutch company has even launched contactless jackets for homeless people, with the rather grim concept of tapping your card on an actual person in order to add funds to a digital account, which can only be redeemed against approved services (shelter and food).
Built into digital wallets
Another way charities are benefiting in the fintech revolution is through the removal of arduous form processes. Thanks to digital wallets, where payment information is stored and easily retrieved on mobile devices, it is now possible to make online payments in a matter of clicks.
Even better, charitable giving is now being built into these ‘frictionless’ solutions. Apple has partnered with 22 UK charities to let iOS users pledge donations using Apple Pay. If I want to donate to causes such as Cancer Research, Unicef, Oxfam or Comic Relief, I don’t have to fill in a long form or try to remember any details. It works from the Safari browser rather than my iPhone wallet, however, so there is still a way to go to make this an exceptionally straightforward user experience.
Other digital payment providers are also seeing the benefits of making paying ‘frictionless’ on the charity sector. PayPal saw $7bn of donations made through their platform in 2016 – and CEO Dan Schulman believes this is helped by how easy the platform is to use.
Finally, innovations relating to international payments could take ‘charitable giving’ to a whole new level. A distributed decentralised ledger for payments, i.e. blockchain, could solve serious issues and resolve concerns around international aid, as donations could be tracked and attributed.
‘The application of blockchain in charitable giving is almost an inevitability,’ writes Bird Lovegod, editor of The Fintech Times. ‘Companies such as Disberse.com are already trialling the process, creating end-to-end supply chains that self-audit and provide donors with the transparency they need in order to feel confident their donations are legitimately and efficiently used. Hull-coin.org has developed a similar process. Blockchain technology is certainly part of the wider solution.’
In related news, MasterCard is using the power of payments for massive social good, planning to use their technology to help cure Hepatitis C.
Will charities go contactless?
A concern with any technology that makes it ABSOLUTELY friction-free to make a payment is legitimate: could vulnerable people spend too much without really realising? If charities make donating almost thoughtless, are they really doing the right thing?
Cost is another consideration. Digitalisation is often rolled out to reduce costs (shorter slicker processes, fewer people to train and pay, etc.) but technology is still an investment. Would adding contactless functionality to donation boxes add enough value to be worthwhile?
Max Kalis, Independent Innovation & Fintech Consultant for Influx Consulting, thinks technology has wider implications for charitable giving. ‘For all the interesting new approaches, the biggest impact of innovation around charitable donations is the digital services that have democratised fundraising in recent years, making it accessible to be harnessed by individuals, including the pioneer JustGiving and similar services from BT and Virgin, among others. However, it surprises me how high the service charges are for using these services and I think this space is open to an enlightened company achieving a great marketing impact by offering fundraising services for free to the army of people engaged in positive activities.’
As carrying cash falls out of favour, it may be that the ‘chuggers’ have no choice but to adapt those charity boxes for contactless payment, by card or mobile device – or maybe move fundraising efforts away from the street altogether.