Must payment processors confirm an organization’s 501(c)(3) nonprofit status?

If you're offering a specialized discount and/or promotion that requires the non-profit status to be verified, then you should. This check can be done by searching through the Non-Profit 501(c)3 databases.

You can see the reasons listed by IRS as to why this check is done here:

• Exempt Organizations Select Check: Function
• Exempt Organizations Select Check: Frequently Asked Questions