Processing Fees Can Help Subsidize Sports League Registration Costs
By Brian Litvack
June 14, 2012
LeagueApps offers the option to add a processing fee as part of the online registration feature. We’d like to share a bit more about this feature and how it is being used by our league partners.
The processing fee is an optional setting that allows a sports organization to charge an additional fee as a separately displayed line item. The league admin can set the fee to whatever price he or she prefers. This is a useful tool to explicitly pass on processing fees and clearly indicate this to sports participants.
Convenience fees have become a common and often acceptable component of online transactions. Different types of online businesses use a convenience fee including movie tickets, reservations, concerts, sports events and online services and billing. Ticketmaster and Fandango are well-known and popular companies that use service fees.
Almost half of all of the sports organizations on LeagueApps enable processing fees. In fact, 41.6% of all registrations through LeagueApps contain a processing fee. These fees vary, usually between $1 – $5 per registration. Many organizations use processing fees to roughly cover the costs of credit card charges that hover between 1.8-3.5%.
Processing fees are not a fit for every organization. The option to use this registration setting within LeagueApps is at the discretion of the league staff. Sports league that enact a processing fee often experience very limited push back from their members. Customers understand that there are costs associated with the benefits of utilizing online payments.
If you do use processing fees, there is the ability through LeagueApps to add protections for your members that may have an issue with a processing fee. The first is to allow an option for the participant to pay in person or by check without an additional fee. Very few members will opt for this option but they do like to have a choice. The LeagueApps platform even allows the admin to determine the label to be used for processing fees. Other terms that are widely used include “convenience fees” or “service charges”. Another alternative is to just increase league fees instead of separating it out as a processing fee. Either way, the organization will collect all of the payment directly into their bank account.
Are Processing Fees Permissible?
Yes, we believe so. Visa and other major credit card companies allow convenience fees as long as the fee is for a bona fide convenience of using an alternate payment channel outside of the merchant’s normal business practice.
By definition, convenience fees are levied for the privilege of paying for a product or service using an alternative payment channel, or a payment method that is not standard for the merchant. Sports leagues, for example, often accept registration and payment in person. However, if a sports leagues gives customers the alternative option of paying online using a credit card, then that league could charge a “convenience fee” for the privilege. So technically, the participant is not paying for the privilege of using their credit card, but for the privilege of using the more convenient option.
The LeagueApps team will be happy to consult with you on the best options for your sports organization. We’d also like to learn more about your experiences with processing fees and how they can utilized properly.