Donors who make small but frequent contributions (even in amounts as little as $1) are delivering a huge payday for credit card companies
, in amounts as small as $1. But what these grassroots supporters may not realize is that, in making small, repeated contributions, they have, in aggregate, delivered a huge payday for the middlemen, often large banks and financial institutions that process those payments.
The driver of the ever-increasing windfall for credit card processors is a fundamental change in the way political campaigns have courted online donors. With candidates both seeking a large number of donors—irrespective of the amount they give—and aiming to turn them into repeat low-dollar contributors, there’s a huge upside for the companies that process those donations: the per-transaction fees.
And as contributors make smaller but more frequent contributions, those per-transaction costs have a disproportionate impact. That escalation has almost certainly been influenced by the Democratic National Committee's presidential debate-participation requirements. To qualify to appear on the debate stage in June, candidates had to garner contributions from more than 65,000 unique donors. That number has gone up and up—130,000 for August, 165,000 for November, 200,000 for the upcoming December debate—and resulted in many candidates soliciting online donations as low as $1 to make the cut.
Many in the political industry cast the fees as simply the price of doing business, even at the state and local levels. “Ultimately, we had to keep the money flowing in as quickly as possible,” said Cameron Russell, who managed Christine Hallquist’s 2018 Vermont gubernatorial campaign. “We didn't have time to stress over the transaction fee.”
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