Payment Account Upgrade on Race Renewal

For those races that use our Quick Start (Check) payment account to receive registration proceeds we will now require you to upgrade to an Advanced Payment account at the time of your next race renewal. If you are using a Quick Start (Check) payment account you will receive this message when you renew your race.

payment

You will be able to set up a new Advanced Payment account at that time or choose to use an existing Advanced Payment account if you have already one set up. We will make the upgrade process as painless as possible by pre-filling the new Advanced Payment account form with your existing account information. You will just need to verify the information and fill in any additional information, such as a Tax ID or EIN number for entities, which is required for the new account. You can elect to continue to receive checks or upgrade to ACH payments from the Advanced Payment account. Participants will be able to register for your renewed events but race payments will be held until the new account is set up.

Many of our Quick Start (Check) payment accounts were set up years ago. We are taking this step to improve compliance with credit card industry rules, verify that all of the information on your payment account is accurate and upgrade you to an Advanced payment account. Advanced payment accounts offer a number of features which are not available on the Quick Start accounts such as a 4% fee on donations, better settlement timing on Amex transactions and up to daily payments.

Deferred Payment Setup Warning

Often the person setting up a race is not the person who has the information on setting up the payment account. We provide a “Deferred Payment Setup” where we allow a race to process up to $3,000 and then we turn transaction processing off. We do this per requirements from VISA and Mastercard as part of our Payment Facilitator agreement, and to prevent fraud and money laundering.

We have added a warning at the top of the Race Director Dashboard to races that are in this mode:
Unknown-2

We also trigger an internal warning if a race is about to open in the next several days to one of our customer service people so we can try to contact the race director to let them know how important it is to complete the payment account setup.

The Big Short and Registration Payments

DollarI went to The Big Short movie last night. I consider myself an amateur economics student of that time period and have read all the books – The Big Short, Too Big To Fail, and the ones by Geitner, Bernanke and Paulson. I found the network effects of financial leverage when things go bad to be tragically fascinating.

It brought to mind some potential issues in our little space of race registration payments.

Funding with Float
The key potential problem for some registration providers is if they depend on the float of registration payments to fund their business. Some registration providers process money within their own bank account and then make payments from that account. The longer they take to make payments, the more money they have in “float” in their bank account to use for other purposes.

For example, if a registration company is processing $1M per month in race fees and makes payments to races on average 2 weeks after they collect the money, that is $500K of cash float. That $500K is money they do not have to raise by other means and can be used for all of their expenses (like paying employees or cloud computing or marketing or legal fees).

As long as this float is consistent, then there is no problem.

Potential Float Pressures
There are various things that can bring pressure on the use of the float:

  • Seasonal variability. There is more money flowing in April than December – so in the above example the float may range between $250K-$750K.
  • Customer Pressure. Customers may demand more frequent payments, forcing registration providers to move from two week cycles to daily cycles.
  • Loss of business. If business declines 10% due to customers moving to other platforms, then the float decreases by 10%. In the example above, this might mean a loss of $50,000 of cash available to meet payroll if the business is operating close to their cash flow and if they do not have spare capital.

No Float Operating Model
RunSignUp operates on a no float operating model. Most of the race fee revenue is held in either the PayFac accounts or in the Braintree Marketplace accounts of each customers sub-merchant account. RunSignUp has no access to use that money, only the ability to send instructions to pay it out to the race. We have a decreasing part of our business that is under our original system where the money flowed thru our bank account and we make weekly payments to those customers. Even with that, we ensure that we have cash beyond the amount owed to customers to operate our business.

I want to sleep well at night knowing there will not be a “run on the bank” in our business and we do not put customer’s money at risk in any way.

Why this is Important to Registration Companies
The worst thing you can do for your business is get into a cash crunch. It affects customer relationships negatively and can start a downward spiral that is difficult to get out of. We recommend all registration providers to become a Payment Facilitator if you can, or at least implement a system like Braintree Marketplace or Stripe where customer funds are held separately from your funds. This helps you avoid the temptation to use customer funds for other purposes.

And it is important that some registration companies do not fail like the banks in 2008-2009. There is no “bailout” that would come, and there would be some amount of contagion and flight of race fees to stronger vendors.

Why this is Important to Races
Your race may not need fast payment. Many of your expenses can be paid after the race is over, such as the timer, DJ, food, Port-a-potties, etc.

However, it is a fair question to ask your registration provider where your race fees are held and what their key numbers are:

  • Current Asset/Current Liability Ratio
  • Cash Balance – Race Payment Due = Net Real Cash for working capital

Chicken Little
I may be a bit of a “Chicken Little” on this topic. However, the industry has seen a pretty dramatic shift in vendor market share over the past few years with many smaller vendors coming into the market fed by the customers moving away from older vendors. So both older vendors and newer vendors may suffer if there is more change.

A little due diligence before selecting a registration provider may help you avoid any issues with your race.

Fraudulent Races

Credit Card ProcessingUnfortunately, one of the things we have had to get good at this year is catching fraudulent races that have been set up (in addition to fraudulent transactions and hacking attempts).

Over the past two days, we have caught 2 fraudulent races being set up. While that is a low percentage among the 773 new races that have been set up on RunSignUp so far in December, it is something that is dangerous to our industry.

Becoming a Payment Facilitator has helped us improve our processes around approving races to handle transactions and take payment. We know this has introduced a new hurdle in getting races set up, but it is now necessary. Processing transactions can put a registration company in financial peril and potentially affect other races using the service.

We are also going to start taking a stricter review process with races who want to use RunSignUp in terms of quality checks of their race websites. If you receive a request from RunSignUp to improve the content on your race website, please understand that it impacts the image of the entire RunSignUp community. We reserve the right to delist any website who we determine to be potentially fraudulent or has in appropriate content.

Holding Manual Payments

DollarIf you are on Manual Payments, you will see an option on your Financial Summary – Payments page for holding payments. Many small races are on Manual payments and may not want the complexity of getting daily or weekly payments and only want to release the funds when they want to. Releasing funds will put it into our next Monday schedule – NOT immediately. You will need to release it on Sunday before Midnight to initiate the Monday payment.

Hold Payments

New Race Financial Reports

DollarWe have done a major overhaul on our Financial Reports. The Summary page now gives a quick overview with 3 tabs to drill down on:

  • Transactions – these are focused on the individual transactions that have been processed on behalf of your race.
  • Payments – These are a list of all the payments that have been made to your race with many drill down reports.
  • Payment Accounts – This is where you can get information about the account we make payment to. This is also helpful for organizations that have multiple races and allows you to see how a payment was broken between multiple races.

Financial Summary

The above screen shot shows a financial summary page for a race. In the middle, there is a button to view a Detailed Summary:

Detailed Summary

Clicking on the “Show Excel” button downloads this report:

Excel Financial Summary

If you click the Show Quantities button in the upper right corner it shows the quantities:

Detailed Financial Summary with Counts

Payments
The second major tab shows Payment Information. This will look slightly different depending on your Payment Account type and payment frequency. It shows a quick summary of how many payments for the selected period (defaults to current race period – typically this year’s race, but you can switch event dates at the top of the page). Below are a variety of ways to look at your payment information, as well as drill down on specific areas like donations:

Payments

The Summary Payment Report downloads an Excel spreadsheet that shows each payment in rows, and the various types of transactions that your race had as columns (there can be about 30 if you have a lot of options) like registrations, donations, store items, coupons, etc. To the right it shows the breakdown by event. Note the Tabs at the bottom of the spreadsheet that allow you to drill down on each payment:

Summary Payment Excel

We spent a LOT of time working on the Detailed Payment Report. It first asks you to select a specific payment and then shows you all of the details of that payment. It shows a unit price, quantity and total for each type of thing your race offers, as well as anything like refund account holdbacks that affect your individual payment:

Detailed Payment Excel 1

Detailed Payment Excel 2

The Individual Payment Summary can be used if you do not have Excel or want a quicker and higher level view of the payment:

Individual Payment Summary

Note the Overall version of this is useful for organizations with multiple races on the same payment account. For example:

Multi-Race Payment Summary

The Event Summary shows a similar version of the above two reports for the race by event (5K, 10K, etc.). The Race Date Summary shows multiple years on a single page in summary fashion.

Race Payments List shows a list of Payments with quick links by each payment to the various reports above:

Race Payments List

One of the links on the right – View Race Transactions – shows the transactions that make up that payment. This works best for races using Advanced Payment since we are able to specifically match a a transaction.

Transactions in a Payment

The second section of Payment Reports drill down into specific transaction types. These are fairly self-explanatory and cover:

  • Transactions
  • Registrations
  • Donations
  • Store Items (not Add-ons – those can be seen either int he Add-on report or the detailed reports shown in the first section)
  • Corporate Team Payments
  • Refunds
  • Holdbacks
  • Adjustments

The final tab is the Payment Account information.

Payment Account

If you have multiple races, this can be a useful tab to understand payments being made for multiple races, for example:

Payment Account

Thanks to all of the races who helped feed us requirements for these changes. We hope you find them useful (because we spent a lot of time on them)!

Advanced Payment Delay

Vantiv, our credit card processor for Advanced Payment accounts had delays in their batch processing yesterday that resulted in us being unable to execute funding instructions before 6PM. This will result in a payments that daily payment customers would expect today to be made tomorrow. Today’s ACH initiation will include the transactions that should have been in yesterday and in today as per the schedule below.Daily Payment Schedule

We apologize for the delay, and Vantiv assures us they continue to make advancements in correcting their occasional delay issues.