As financial stewards, we must be cautious of the resources entrusted to us in our church ministries and how they are used. This includes taking steps to prevent fraud and embezzlement. Many churches are now using debit cards in their ministries. If you are doing this, it’s essential to understand the risks and take the correct steps to prevent losses with their use.
While there are many forms of payments, this article specifically discusses the use of debit cards in the local church setting. A debit card can provide benefits when compared with a cash transaction, but can also bring with it some risks that are not as obvious. It is essential to be aware of the risk side of the equation to be able to make an informed decision. Here are a few of the typical tradeoffs:
- A debit card can be a convenient way to deposit checks and cash into a bank account. Still, it also opens the door for someone to just as quickly withdraw funds without any controls in place. Would using deposit slips with a bank teller be a more straightforward and less risky option?
- While debit cards lessen the risk of only using cash, they are still susceptible to fraudulent transactions. Depending on the bank or card company, these transactions may not be reimbursable. If ease of payment is the goal, a credit card would be preferable because of the more robust fraud protection available.
- A debit card can lessen the reimbursement processing time for a church treasurer. On the other hand, additional controls will need to be put in place, which could require more time.
If you are still open to the risks that come with using a debit card, you must establish some basic controls. A control is a process used to manage resources and lessen the chance of fraud happening. Whenever a change is implemented in a financial process, it is essential to reassess the controls in place and develop new ones if needed.
Some controls you should consider if your church has been using a debit card or is thinking about it include:
- A transaction reconciliation process is critical. Receipts or other supporting documents must be provided promptly to substantiate all transactions. Without this control, a card should never be considered.
- Every card user receives and signs a Debit/Credit Card Use Policy. This document outlines the responsibilities of the various parties. It demonstrates the seriousness of what they are being entrusted with. Adventist Risk Management has a sample policy located here.
- You may be able to set up your account to prohibit cash withdrawals with the debit card. This allows you to use the debit card to make deposits but eliminates the risk of unapproved withdrawals and limit funds access to those with check signing authority.
- The church board should vote which church leaders receive cards and limit the number of cards to only the most essential. As ministry leaders change, conduct a periodic review to determine if debit cards are still necessary for those individuals.
- Strategically consider spending and authorization limits. The board may choose to set a limit on purchases over $500, requiring preapproval by the pastor, treasurer or first elder. Additionally, everyone doesn’t need the same spending limit. Also, consider setting a maximum withdrawal amount per day or per withdrawal. A lower limit means less exposure.
Access to church funds with a debit card brings with it responsibilities that must be taken seriously. If the additional risks aren’t acknowledged and controlled, those responsibilities should not be taken on. Any control should always balance the risk being controlled with the burden to implement it. A control that is too hard to efficiently monitor or practice will quickly fall away as shortcuts are found. Periodically review controls in place to assess if they are being used and their effectiveness. Many of these responsibilities will fall on the church treasurer to implement and monitor. A special thank you to all of the church treasurers who put in many hours of service to our local churches. It can be easy to forget that Treasury is a mission-critical ministry. Without each of you, our church wouldn’t be able to move forward with reaching the lost in this world. Thank you!
Diary of Consumer Payment Choice
Sample Debit/Credit Card Use Policy
Image Credits: iStock/SARINYAPINNGAM