Financial Updates

Finance UpdateOver the next several months we are going to be making a number of financial related updates – and we’ve already begun!

A couple of weeks ago we lowered our processing fees for larger transactions. As we have pointed out, we make our money by charging a small processing fee that is above the credit card processing fees we pay on transactions that involve money.  All of our services are free unless they cost us direct money.  We have a growing number of transactions now that are pretty large – when donors get $1,000 donations, or when a bunch of people register together, or when a Corporate Team makes a purchase thru the web.  Therefore, we dropped the processing fee to 5% for above $250 and 4% above $1,000.  It did not make sense to us to be making too much money on a transaction just because it was a high dollar amount.

The second change goes into effect this coming week.  We have traditionally made payments on Monday to any race due over $200 or that is closed for any payments up until Midnight Sunday.  We have shifted the close date to Friday Midnight.  The reason is that we do not receive payment for transactions that happened on Thursday until the following Tuesday.  Which means we are making payments on money we have not received yet.  We think Friday night is a decent compromise for now.

The third change is to adhere to the US Government’s 6050W regulations.  Paypal does a good job of explaining this.  The essence is that in 2013 we need to generate a 1099 report for any customer that has over $20,000 and over 200 transactions per year.  To do this report, we will be asking you for your TaxID.  For individuals, this is your Social Security Number and for businesses it is your EIN number, and for 501C3’s, it will be your federal registration number.  We have started asking for this information on new races, and will be requesting this information from existing customers over the coming months.  In the summer we will be limiting payments to customers who have not give us the necessary information.  Your information is secured by our AES security system.

The fourth change is coming by this summer.  We will offer an option for races to set up a merchant account to get payment directly from your own merchant bank and the credit card network.  This will mean shorter cycle times and a more direct cash flow to races.  This will not be useful for everyone as there is a lot of overhead in creating your own merchant account, but should be a nice enhancement for some larger races.  We will be announcing a new pricing structure for customers who implement this choice that will be announced as we approach the release of the capability.

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