Here it goes: Starting in 2022, the NFBC will be charging a 2% fee for any credit card purchases. In the past year, our credit card processor increased our rate by 1.25% and our credit card fees are now the number one expense we have in running these contests, higher than live event expenses or licensing fees. While we hate to do it, we are passing on a percentage of these costs to consumers who make purchases by credit card so that we can maintain the prize structure that we've had in place since 2004.
Our national contests will continue to pay out at 80 percent or above of expected entry fees. And of course our NFBC Super, Ultimate, Diamond and Platinum leagues will remain at their previous payout levels (87.5-95%). We could have lowered each contest by 1-2% to make up the difference, but then everyone would have paid for these increased costs from credit card fees even if they don't pay by credit card. So we decided to pass on some of these fees and will do everything we can to help both of us avoid these costs going forward.
The easiest solution to avoid credit card fees is to keep some of your winnings on your player account going forward. Many of you do that and going forward that will save both of us on any credit card fees. I know we already paid you for 2021 NFBC winnings, but going forward if you can remember to keep some of your winnings on account and use that money for future entry fees, then you won't have to worry about this pass-on expense. And best of all, we won't have to incur any of these expenses, either.
The second solution that we want to push right now is depositing money through an ACH. There is no cost to you for doing this and no cost to us, so we both win. All you need to do for that is to post your bank account number, your routing number and the amount you want to put on your Player Account and those funds will get transferred to your Player Account at no cost. Then you can use those funds to pay for any future entries and everyone wins. We will gladly help you with ACH payments if needed, but basically you sign up for a contest and when checking out to pay you choose the ACH option and transfer the funds from your checking or savings account. It's that easy.
The only drawback with ACH is that we can't store your banking information for security reasons, so you'll have to input your account number and routing number each time. That's due to security reasons and good for you, but it's likely going to be a pain to do that each time. However, you can put enough funds on account when you're ready and hopefully that will make things easier. But again, both sides don't incur a cost when paying that way.
Again, the 2% surcharge is only a fraction of what we are paying right now for credit card fees. Credit card processing within our industry has gotten more difficult and more costly since legislation hit our industry after 2016 and all we can do is pay the going rate. But that rate has pushed our cost into the hundreds of thousands of dollars each year, and combined with licensing fees, it's making season-long games more and more difficult to manage. We aren't asking for sympathy, but there's a reason why no national season-long contests have emerged over the last 6+ years and that's because of the enormous hurdles that have been erected by state-by-state licensing and the cost of running these games.
And so our goal was to leave the prize structures the way they are for 2022 and to find some help with the increased credit card fees. In 2021, we had just over 50% of all entry fees being paid by credit cards, so we do have a lot of people leaving money on account or paying us via checks. If we can push that needle to 25% or lower, we'd all benefit and we'd all save money. So that's the goal.
We have never passed on the credit card fees in our history, and in fact we have a little history behind credit cards. In 2002 when the World Championship of Fantasy Football (WCOFF) debuted, they did not take credit cards because that was an added expense. When we debuted in 2004, one of our selling points was that we DID take credit cards. Our rate at that time at Krause Publications was under 2% and it just made good business sense to take credit cards and to pay a little more in prizes. We were at 80% for prizes and WCOFF was at 75% in prize payouts, but they quickly went to 80% and began taking credit cards. Neither of us passed on that expense to the consumer and I'm not sure anyone else has to date in the industry. We don't want to be the first one to do it, but the cost right now is too big to ignore. So we're asking for help.
But we're hopeful that both of us can avoid these costs if possible. Three ways:
1) Leave winnings on your Player Account to cover as many future entry fees as possible; and
2) Use an ACH transfer to move money from your checking or savings account to your Player Account. Then use that money to pay for entry fees. There is no cost to you or to us for that.
3) Pay us by check or cash...you can still send Darik checks or use cash at Live Events.
And if the credit card is still the best payment method, then we both pay the fees. It's not ideal for either of us, but it allows the NFBC to keep prize payouts at 80 percent or higher and it allows us not to eat a six-figure expense. Combined with the compliance fee (sorry), this allows us to combat the rising state-by-state licensing fees and credit card fees that are threatening season-long games. Hopefully you can understand.
Thanks all and good luck. The 2022 NFBC season launches next week and we expect it to be a record-breaking year. Here's to NFBC XIX (19)!!!
