The battle over the price hike threat has exposed growing tensions between top GOP officials and a company that has a virtual monopoly on online processing of GOP campaign donations.

Party leaders have spoken out against a price hike plan that would siphon millions of dollars out of GOP campaigns less than 20 months after WinRed said its finances were strong enough to waive additional per-transaction fees.

In a series of private meetings in recent weeks, Gerrit Lansing, President of WinRed, told Republican National Committee leaders, House and Senate campaigns, and former President Donald J. Trump’s campaign that WinRed prices should rise.

All Republican officials objected.

Mr. Lansing’s company, the privately held business firm responsible for processing nearly all online Republican political donations, charges 3.94 percent on nearly every donation made online. But he said it wasn’t enough, citing an unexpected downturn in online GOP donations last year, as well as plans to expand WinRed’s suite of services. He proposed a 30-cent transaction fee on each of the tens of millions of upcoming contributions in the 2024 race, according to several people directly involved in the negotiations or informed of them.

According to people involved in the talks, the price hike plan appears to have stalled due to aggressive GOP facilities. But the episode has accelerated talk at the highest level of the party about the decision four years ago to clear the way for WinRed to dominate online donation processing, and whether the business model needs to be re-evaluated.

Democrats process the majority of online donations through ActBlue, which, unlike WinRed, is an independent non-profit organization. ActBlue charges a flat rate of 3.95 percent per donation and does not charge any additional transaction fees.

“WinRed is constantly evaluating what it takes to compete with and stay ahead of ActBlue, fight the Democrats’ campaign to attack us with every means available, and continue to make the necessary investments to give our customers the features they need to win,” WinRed said. in a statement. “WinRed does not currently have pricing announcements.”

Representatives of party committees declined to comment.

Mr. Lansing’s drive to attract outside investors to expand WinRed’s digital footprint and offerings, including talks with advisers to Paul Singer, a major Republican financier, sparked further discussions about the company’s ownership structure.

The little-known online donation processing industry is of great importance to Republicans because the party has faced a persistent shortage of digital fundraising funds compared to Democrats. WinRed is considered the linchpin of the party’s plans to close this gap.

Huge sums involved. During the 2022 federal election, nearly 31.2 million donations were made to WinRed, worth almost $1.2 billion. The upcoming presidential cycle could easily double that number.

The creation of WinRed in 2019 was to be one of Trump’s enduring legacies within the Republican infrastructure. a bold attempt to unite the party around a single platform to help close the Republican Party’s fundraising gap with ActBlue. Mr Trump, his son-in-law Jared Kushner and Mr Trump’s then campaign manager Brad Parscale were personally involved in the affair.

The site was largely a success, gaining near-universal acclaim among GOP campaigners.

Initially, WinRed charged 3.8% in fees, with an additional transaction fee of 30 cents. This was a particularly large proportion of small donations—68 cents, for example, or nearly 7 percent of a $10 donation.

In late 2021, Mr. Lansing trumpeted the elimination of the 30 cent transaction fee, saying the company was able to “Achieving and Maintaining Scale”. But the decision by credit card companies to raise their own fees shortly thereafter made WinRed’s move unsustainable, according to a person close to the company, as most of its processing fees are quickly spent on credit card costs.

In recent weeks, Mr. Lansing has told party officials that WinRed suffered a financial loss in 2022 as a result of Republican donation cuts and that it needs to reintroduce transaction fees through 2024 to continue broader investment in technology.

Since WinRed is a privately held firm, its executive compensation and financial position remain largely hidden from prying eyes. Records show federal candidates and committees paid at least $64 million to WinRed in the 2022 election cycle; according to a person close to WinRed, these funds were not all from processing fees, but also included significant vendor fees.

His Democratic party counterpart ActBlue also ran into financial difficulties, announcing her plans in early April. lay off 17 percent of its workforce. ActBlue reveals more of its finances than its counterpart, including the number of donors who have volunteered to add “tips” to their donations. These tips go directly to ActBlue, and by the end of 2022, ActBlue’s federal account had a balance of $68.7 million.

According to people who took part in the discussions, Mr. Lansing began to discuss adding the ability to give advice to the Republican site.

WinRed is facing other unique challenges, including an investigation by several state attorneys general into the firm’s use of pre-marked boxes that automatically enrolled donors for repeat donations unless they opted out. A 2021 New York Times investigation revealed how the widespread use of these boxes, known internally as “money bombs” to withdraw more than one donation at a time, sparked a huge wave of refund claims and fraud complaints at credit card companies. . end of campaign 2020.

WinRed sued to block subpoenas but lost a key legal battle in February when the U.S. Court of Appeals for the Eighth Circuit rules that the investigation could continue in Minnesota.

In New York, State Attorney General Letitia James’ December statement demanding compliance with the subpoena provided insight into internal documents her office had already obtained.

The application cites an internal WinRed memo stating that at one point in June 2020, donors who had selected multiple donations through pre-tagged boxes caused a spike in phone calls and a “long queue of 10,000 messages in one weekend” . Recurring donations declined over time, the memorandum suggested, because “as donors got used to or went through the process, they became smarter.”

One Republican candidate who saw a surge in requests for refunds from people who unwittingly agreed to regular donations was Kelly Loeffler, a senator who lost her second round in Georgia in January 2021 and found the WinRed experience distasteful.

“It was a wake-up call,” Ms. Loeffler said in an interview, referring to the flood of refund requests.

Ms. Loeffler, a former co-owner of the Atlanta women’s National Basketball Association team, has since bought donation processing technology from a Republican firm that went out of business after WinRed was created. She has rebranded the technology and now uses it to run RallyRight, another online donation company.

“We saw a need for a competitor in this market,” Ms. Loeffler said.

So far, it’s underperforming WinRed on the price—charging 3.5 percent of donations—and ensuring that “no campaign can automatically tick the recurring payment box.” She declined to name the specific Republican groups she spoke to, but said the price could be even lower—as much as 3 percent—given the “scale of some of the organizations we’re talking to.”

Ms. Loeffler said she was in business not for personal gain, but to funnel more money into campaigns. “It’s absolutely not that I make millions of dollars,” she said. “I did it.”