If you have ever registered online, then you should be familiar with the added processing fee on the transaction. You may have often wondered what this is for and why you have to pay it. Unless you have been in retail or banking, you may not realize that the credit card companies charge every transaction a percentage for processing and handling of the money. In the case of retail, that charge has always been absorbed by the retailer. The charge is between 3% and 5% of the transaction depending on the particular card and status of the retailer. This means that for every $1 that you charge for a purchase, 3 or 5 cents of that transaction actually goes to the card processor. It's one of the most frustrating expenses that a retailer incurs and in many cases they pay out more in credit card fees than they actually make in profts. That is especially true in grocery and convenience store operations.
So the question is not whether events are also having to pay that charge, but why the event is passing that on to the participant. Most races use a third-party registration processor to handle their transactions. The processor usually charges around 6% of the transaction plus an additional fee. This fee in most cases could be absorbed by the race, but in most cases is added to the transaction and paid by the consumer. The entry fees on most races are small enough especially with all of the expenses incurred by the race such as t-shirts, awards, food, drink, etc., that if they also had to pay the transaction fee, there would be no money left. Some races will actually charge a higher rate and absorb it, but you as the consumer are still paying the fee in the form of a higher price.
One of the (what we consider disingenous) operations by some management companies is to actually bump up the processing fee to 8% or even 10% of the transaction and then "offer" to manage their event for free. Most races don't realize that is what they are doing and think that the management company is simply being altruistic. As the old saying goes, "Nothing is for free". It's unfortunate when race directors succumb to this offer because they are actually causing their participants to pay a higher transaction than they should. It may be free to the race as they don't have to pay for event management, but the participants are getting gouged.
So why are the processing fees as high as they are? Why are they higher than the credit card company fees themselves? You have to think about the processing and handling of the transactions by the registration processor. It is expensive to hire programmers, manage computer servers, process checks, handle customer issues, etc. That has to be paid for somehow. I doubt that there are many that would do that for free. There are companies that are offering lower processing fees, but they are making up for the cost through advertising or other means.
We actually work with several processors depending on the particular event. We prefer that the processor we use charges by the basket rather than the registration. What this means is that the processing fee is based on the total of the entire transaction rather than each registrant within the transacion. For example, let's say that the fee is $2 for a $20 transaction. For a per registrant fee, you would pay $2 each when registering together to make it a total of $4. If you register together on a basket basis, you might only get charged $3.00. It's a much better model and more friendly to the registrant. We can't do much about the fees but we can try to make it as fair as possible.
There is also a fee that most people are not aware of that impacts the retailer or business that takes a credit card. Some people will decide for whatever reason to deny a charge with the card company. We have actually had runners who will participate in an event, take the shirt, food, etc., and then deny the charge. Sometimes runners will do it because they may have forgotten what the charge was for or the event may have gotten cancelled and they feel it their right to deny it. The problem is that chargebacks by the company automatically incur a $25 charge to retailer. Even if you dispute the charge, the retailer is still stuck with the $25 charge. If you dispute and it comes back, then there is another $25 charge. For most events, it's simply better to just let it go. Not only has the event been charged $25 for the chargeback, but they also end up losing the event fee. That really hurts the bottom line. It's fraudulent and the person who does it should be legally charged but it's not worth the effort or expense. If you do have an issue with the event or any retailer for that matter, please be courteous and do the right thing by simply pickup up a phone and asking for appropriate compensation.
I hope that this explanation helps to explain the fees.
See you at the race!
