Today, the crowdfunding business is thriving and expanding with great impact. The business helps people to raise funds by contributing small amounts of money from a large number of persons.
Crowdfunding is often carried out by individuals who need financial assistance to support and promote their projects, innovative ideas, and business through fundraising platforms. Social media and other online platforms are the major places to connect with people to fund crowdfunding campaigns.
Campaign creators usually describe their intentions and reasons why people should support the crowdfunding campaign. Depending on the type of crowdfunding, it is possible contributors receive an ROI. What could be the easiest and convenient payment gateway for crowdfunding businesses, especially in the USA?
A crowdfunding business needs a reliable and convenient payment method to connect people or contributors to fundraising campaigns in order to ensure smooth innovative projects funding. There are several types of payment gateways supported by crowdfunding platforms but not all are available in the United States.
If you’re creating a crowdfunding business, it is very essential to consider the type of payment gateway you want to use and if it is supported in your country. Now, let’s look at the major payment gateways that are often used by crowdfunding businesses in the USA to raise funds for people and business start-ups.
Crowdfunding Payment Processing
Different crowdfunding platforms with different payment processing and types of crowdfunding business. Reward and donation crowdfunding is often known to integrate the most sophisticated payment gateways to ensure smooth payment processing for people.
The amount of money donated could be relatively small or huge, if the payment processing is comprehensive enough, it’d be secured.
On the other way round, equity and debt-based crowdfunding websites implement manual payment processing through bank transfer because of the large amount of money usually by investment ranging between $5,000 — $100,000.
There are other factors that differentiate manual payment from automated payment processing. Each of these methods is required for particular purposes.
Manual payment processing
This payment processing gives business investors the opportunity to send money directly into the platform’s bank account. When the required sum to fund a project has been gathered, the fund manager sends money to the business owners.
This payment method provides a crowdfunding platform opportunity to become an online ledger. All the payment is processed through the bank and the record is documented.
Automated payment processing
The use of technology makes business operations easy to operate. Automated payment processing gives crowdfunding businesses the opportunity to help a lot of people with a single click.
It provides KYC/AML verification support. This payment method offers so many great opportunities.
It enables the following features:
- Automated dividend distribution
- Scheduled repayments and auto-investing
- Additional KYC/AML
- Dispute resolution support
- Escrow account
- User-friendly wallet management for investors and fundraisers
- Automated withdrawals
The importance of a payment gateway in a crowdfunding business is to help to scale and process multiple transactions automatically. In donation and lending crowdfunding, automated payment ensures easy fund flow and swift capital connection with creators.
Key Factors to Consider When Picking a Crowdfunding Payment Gateway
- Geographical coverage
This is probably the first thing to look out for when making a choice of a good payment gateway to use. If you want your crowdfunding business to become big and universal in its service, you may consider MangoPay as it serves about 126 countries all over the world. The quality of service delivered and API certification transparency of MangoPay makes it unique, however, it is not meant for everyone due to geographical location.
- API Documentation Clarity
Developers learn and examine effective solutions to satisfy your business requirements within the shortest possible time. This is due to the simplicity and user-friendliness of API documentation; hence it is a crucial point to look out for.
- Payment processing
It is very important to know the best choice of a crowdfunding payment provider to initiate, as it is highly hooked on the type of crowdfunding business you do whether assets or liabilities. The method of payment processing should be constructed in such a way that it provides a channel for cash inflow and outflow.
The source for generating funds for crowdfunding sites may be extremely risky. There is a need to be sure of the source in order to guarantee uninterrupted money withdrawals which often result from the freezing of money accounts. Some features to consider in this regard may include the reputation, previous user’s experience, and the high quality of service that has been rendered over the years without problems.
- KYC/AML Authentication
For any substantial crowdfunding website, it “must” possess Know-Your-Customer (KYC) and Anti-Money Laundering (AML) authentication processes which are required as major regulation-compliance actions capable of saving you from any fraudulent activity or any other risk. Data retrieved through these compliance methods are subject to GDPR compliance procedures. Therefore, it is needed for both individual and corporate investors.
- ISA/Roth IRA integration prospects
Individual Saving Account (ISA) and Individual Retirement Account (IRA) when combined together are beneficial for an investor in a crowdfunding platform who chooses to maximize their Return on investment (ROI) because they are tax-efficient means to save more.
- Service Charge
Every payment processing solution has its own pricing structure. Charges are usually pretty straightforward even though some payment processing providers may not disclose all of the “hidden” fees for some reason. Other crowdfunding payment gateway will craft custom offerings for you depending on the type of your business.
Usually, you’re able to negotiate the fees depending on the scale and scope of your transactions. Moreover, you can agree to impose the third-party fees on your users as, for example, Assembly Payments suggests.
Major Payment Gateways for Crowdfunding Business in the USA
A well-established crowdfunding business should enable both international and local payment gateways. Below are the popular payment methods used in crowdfunding and other major businesses in the USA.
- Direct transfers: Bankwire
A bank wire transfer is a way to send funds electronically from one bank to another. Customers are able to send funds through a domestic wire, which is within the US, or an international wire, which is outside of the US. Fraud prevention is an originating bank’s top priority when sending a wire. In crowdfunding, the payment gateway ensures swift money transfer from managers to individuals.
- Credit and Debit card Payment Gateways
Credit and Debit card payment methods are the most common and user-friendly payment gateway that gives partners or users the opportunity to send and receive money anywhere across the globe. Connecting with crowdfunding provides easy, secure, reliable, and smooth fundraising for business start-ups internationally and in the USA. The regular types are as follow:
- American Express
- Paypal Payment Gateway
PayPal is an effective and efficient payment processing company across the globe. It is the most common payment gateway in the United states, Australia and Europe. PayPal payment gateway is a secure payment processing company for crowdfunding. It is very effective in all various types of crowdfunding. However, it does support crowdfunding payment in selected countries of the world.
Top features of PayPal
- PayPal promises full payment security.
- It enables individual payment processes.
- PayPal enables multiple payment methods and provides 24/7 customer support.
- It tracks users’ activity and monitors commissions earned.
- It customizes payment pages that creators improve their conversions.
- Also features a smart dashboard for monitoring creators’ performance.
- It helps to detect fraudulent activity.
- It provides customers support when faced with any issues during business operations.
- It is responsive on mobile and desktop and also enables credit cards.
Cryptocurrency Payment Method
The decentralized digital currency has gained wide recognition in major countries of the world. Bitcoin is the major cryptocurrency available on the internet today and has helped several individuals to grow their businesses.
In crowdfunding, cryptocurrency is no exception. It’s widely used in fundraising to support individual business start-ups. It is also one of the perfect payment gateways for all crowdfunding businesses. However, it does support crowdfunding payment in selected countries in the world.
This is a fund management payment platform with a great reputation in payment processing in the United States. In crowdfunding, it ensures easy management of funds and swift fund flow after a campaign. Escrow is supported in the USA for all types of crowdfunding businesses.
Other Major Payment Gateways Used For Crowdfunding
There is no silver bullet as every payment processing company is unique and may become the right option for you depending on your business and operations. To enable a crowdfunding payment gateway, you must register with the SEC to function effectively in the United States.
PayPal, Escrow, and Cryptocurrency are well-known payment gateway providers for major payment processing and they work well for equity, reward-based, donation, real-estate, and debt-based crowdfunding in the United States. They ensure a smooth payment process to creators after campaigns and accountable records and analysis. If you want the best payment gateway for your crowdfunding campaign, check if they have all the necessary features to process your funds with a secure and reliable system.