Many nonprofits face an uptick in debanking risk 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 or even months to resolve.
While debanking remains a critical risk for nonprofits, ownership over your payment tokens can alleviate that risk and help you maintain control of your organization’s financial well-being.
Bluefin founder, Ruston Miles, talked with NonProfit Pro about the issue of debanking, explaining why it’s critical that you own your payment tokens, i which secures cardholder data by anonymizing it as a random string of characters.
“By adopting vendor-agnostic solutions – that are validated by the Payment Card Industry Security Standards Council (PCI SSC) to meet industry standards for security – 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.”
Miles states that with a wide range of tokenization solutions and P2PE systems on the market, nonprofits should consider partnering with a provider with deep expertise in these technologies as well as the unique challenges and needs of the nonprofit sector.
“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.”
Read Miles’ full article here.
