As a Payment Facilitator, we have a responsibility to the banking industry and the credit card networks to do background checks on any race who is processing money thru our site. This is to try to prevent things like money laundering, or bad businesses who will not fulfill the obligations of what they are selling to a credit card holder.
This last part is becoming an increasing worry in the race registration business, as the industry contracts slightly. We see about 6% of races not being held the following year. And while most races do try to deliver a quality experience even if they have not been successful financially, there are a few races who are collecting money and then not holding the race and taking the money. In those cases, RunSignUp is at risk if credit card customers pursue chargebacks and we can not collect the money from the race organizer. And this happened several times in 2017.
As we move forward, we will continue to do quality checks both financially and from a customer perspective to try to minimize the potential harm done to participants as well as the financial risk RunSignUp may take. This is why we will ask payment accounts with larger volumes to share their financials with us. This is also why we may increase holdbacks on potentially risky races to try to have enough money to cover chargebacks that occur after a race.
Likewise, races need to hold their registration providers accountable. Read the companion blog post on why races should ask their registration providers for their Current Ratio.
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