Politicians still raise a fork on the rubber-chicken circuit, attend state fairs, march in parades, hold large rallies, and convene small meetings with supporters to raise money for their campaigns. But they increasingly are relying on credit card donations made over the Internet to fill their campaign coffers.
  Whether the politician is running for city dogcatcher or the White House, many of them have Web sites that allow supporters to make campaign contributions in their pink bathroom slippers from their home computers.
  "Credit card donations made over the Internet are the single biggest source of our funding," says David Swanson, campaign press secretary for U.S. Rep. Dennis Kucinich, a liberal Ohio Democrat and former Cleveland mayor seeking his party's nomination for president. "We do not accept money from corporate PACs (political action committees), and we do not accept rides on corporate jets. We need to reach as many people as possible for contributions, and the Internet is invaluable."
  Kucinich for President Inc. raised $1.7 million during the third-quarter reporting period and $3.4 million since Kucinich launched his campaign, according to the Federal Election Commission. Swanson says 57% of Kucinich's total donations, or $1.9 million, have come from credit card donations made over the Internet.
  Kucinich is not alone in relying heavily on card donations. Clark for President, retired Gen. Wesley K. Clark's campaign committee, has raised 66% of its campaign funds from credit card donations made over the Internet, a spokesperson says.
  Clark, who launched his bid for the Democratic nomination for president in October, raised $3.4 million, according to the FEC. About $2.2 million came from credit card donations.
  The FEC, through a series of advisory opinions, has allowed voters to make card donations over the Internet to their preferred candidate. The FEC delivered its most important ruling on this issue in an advisory opinion released on June 10, 1999, when it allowed candidates to qualify for federal matching funds for campaign contributions made over the Internet, according to Larry Noble, the FEC's former general counsel.
  That action broke presidential fundraising wide open because the FEC dealt with the issue of electronic transfers, Nobel says.
  The Engine's Revving
  Web-based card donations have been revving the political fundraising engine ever since. The day after U.S. Sen. John McCain, R-Ariz., won the New Hampshire Republican presidential primary in 2000, he raised $6 million through Internet contributions. Albert Gore, the 2000 Democratic nominee for president, also accepted card donations over the Internet.
  The candidates seeking the 2004 Democratic presidential nomination, however, have raised the visibility of this form of fundraising to headline-grabbing highs. In particular, Howard Dean, a physician and former Vermont governor, has been highly successful on the Web. Dean for America, Dean's campaign arm, raised $7.4 million over the Internet, half of the $14.8 million the campaign raked in during the third quarter, according to Convio Inc., an Austin, Texas, company that designed and operates Dean's Web site.
  Convio also designed and operates Connecticut Sen. Joseph Lieberman's Joe for President Inc.'s Web site, but a Convio spokesperson says the firm is "verboten" from discussing it.
  Since Convio opened Dean's Web site in April, his campaign has raised $11 million online. The success of online fund raising has been key in raising Dean's campaign visibility because money is, as the old clich? goes, the mother's milk of politics.
  "He's gone from a nobody with no chance to the leading candidate, and the Internet has taken him there," says Phil Noble (no relation to Larry), president of Charleston, S.C.-based Internet political services firm PoliticsOnline. "Dean has made online fundraising central to his campaign."
  The Democratic candidates' success with Web-based fundraising is more evolutionary than revolutionary, says Larry Noble, who is now executive director of the Center for Responsive Politics, a non-partisan organization in Washington, D.C., that tracks money in politics. Consumers who have become comfortable typing in their credit card numbers to pay for Web purchases don't have any problem using their cards to make online political contributions, he says.
  Phil Kumnick, senior vice president of global partner solutions at Tempe, Ariz.-based merchant processor Vital Processing Services, which processes online card donations made to Dean, echoes that view. "They would rather make a contribution over the Internet than write a check and mail it," he says.
  The growth in online contributions has spawned new business opportunities for processors and merchant acquirers. From July 2002 to July 2003, Vital recorded an increase of well over 40% in processing card donations for political candidates, Kumnick says. He adds that other companies, which he declined to name, are processing millions of card transactions involving political donations.
  This growth area has attracted a lot of dabbling from various processors, but not specialization, according to Joe Kaplan, president and chief executive of Innovative Merchant Solutions, a merchant acquirer based in Calabasas, Calif.
  San Francisco-based Wells Fargo & Co. processed Web-based donations for one of the candidates running for mayor of San Francisco last month. Wells also designed the candidate's Web site, but the bank declined to name the person.
  "The credit card is another payment vehicle for political donations, and we are experienced in handling secure credit card payments on the Internet," says Debra Rossi, Wells Fargo executive vice president of business Internet services.
  Few Checks or Debit Cards
  Visa USA declined to discuss how much interchange it charges to accept a Web-based political donation made with a credit card, but Kumnick says it is treated as a card-not-present transaction. The Visa rate for such a transaction as of Aug. 1 was 1.85% of the sale plus 10 cents. If the acquirer verifies the cardholder's address, it realizes certain chargeback rights, he adds.
  Political donations made over the Internet with a MasterCard qualify for MasterCard's Merit 1 interchange rate, according to Kumnick. That rate is 1.90% of the sale plus 10 cents.
  Nearly 100% of online political donations are made with credit cards, says Phil Noble of PoliticsOnline. "No one talks about electronic checks or debit cards," he says.
  The candidates seeking the Democratic nomination, however, differ in what card brands they accept. Kucinich, who considers himself the candidate of the working class, accepts Visa and MasterCard. Clark accepts Visa, MasterCard and American Express and so do the campaigns of U.S. Sens. John Edwards and John Kerry.
  Donators to Al Sharpton 2004, the Rev. Al Sharpton's campaign organization, can make contributions using person-to-person electronic payments provider PayPal. A PayPal account either can be funded with a check or a credit card. The cost to accept a PayPal transaction is considerably lower than that of a card payment.
  Kaplan, of Innovative Merchant Solutions, says card contributions are the most popular way to make a donation to a political candidate because they are the most efficient.
  "If a person writes a check and mails it, the candidate has to wait for the check to arrive," he says. "The person also may forget to write the check. If a person wants to make a donation over the telephone, the telephone lines of a candidate's phone bank may be busy. Card donations are quick and secure."
  An Edge for Democrats?
  The acceptance of credit card donations may give an edge to the Democrats, who typically raise less than Republicans do. In an industry dominated by $2,000-per-plate black-tie dinners, Vital Processing's Kumnick says the average card donation to candidates is $80. Swanson, of Kucinich for President, says the average donation from the campaign's 44,149-member database of contributors is $75.39. Dean for America has raised 71% of its contributions from small donors or through small payments, says Convio.
  "The normal Democratic or Republican campaign has been more like around 30% from small contributors," says the Convio spokesperson.
  Matthew Rothschild, editor of The Progressive, a liberal magazine based in Madison, Wis., praised Dean and Kucinich for their fundraising in an Oct. 17 editor's note.
  "Dean and Kucinich have managed to become less reliant on the superrich, which should make them more responsive to the needs of ordinary people," Rothschild wrote.
  To assuage concerns about online fraud, most of the presidential candidates make clear to individuals that their Web-based card donations will be secure transactions. For example, John Edwards's and U.S. Rep Richard Gephardt's Web sites prominently display the VeriSign Secure Site logo. Former U.S. Sen. Carol Moseley Braun's Web site explains that the Carol Moseley Braun for President 2004 campaign organization has partnered with Bank of America to guarantee "absolute security" of a donor's credit card information.
  On most of the candidates' Web sites, supporters can contribute amounts ranging from $25 to $1,000. The minimum contribution is $5, and the maximum is $2,000.
  Before a person can make a donation over the Internet to a candidate, he has to answer "yes" to a series of questions on the candidate's Web site. They are:
  * I am not a foreign national who lacks permanent residence in the United States.
  * This contribution is made from my own funds, and not those of another person.
  * This contribution is not made from the general treasury funds of a corporation, labor organization or national bank.
  * I am not a federal contractor.
  * This contribution is made on a personal credit card or debit card for which I have the legal obligation to pay, and is not made either on a corporate or business entity card or on the card of another person.
  * I am at least 18 years old.
  The questions are asked to meet FEC reporting guidelines, says Dan Hart, Convio's vice president of engineering.
  But despite the growth of online credit card contributions, there are some concerns.
  Larry Noble, of the Center for Responsive Politics, says people who donate online may not necessarily vote. And Swanson, of Kucinich's office, says soliciting campaign contributions over the Internet does not reach people who don't have computers. Kaplan, meanwhile, worries about chargebacks.
  "What if a person makes a contribution to a candidate who loses?" he says. "Will he want his money back?"
  It's a concern, but so far a minor one. As Campaign 2004 heats up, politicians of every persuasion are coming to an agreement that cards and the Web have widened the fundraising base.

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