I’ve noticed that if you have a ‘Deposit Account’ set up with USCF you can have a minimum rating fee online of $1 instead of $3. How do you get that set up? Is it as simple as mailing a check to USCF?
The programming to support deposit accounts isn’t in place yet, nor have all of the policies been set, such as how large your initial deposit must be. (The suggestion made by former CFO Ken Thomas was $100.)
Hi,
This is a great direction. However, as I understand it, there may be three reasons the USCF would go for deposit accounts:
1 - Prepaid rating fees give the USCF a sort of loan, they get the money early and it gets used up perhaps in a short time, perhaps longer.
2 - No dealing with individual payments, checks, saves the USCF time in processing the tournaments.
3 - Convenience to the TDs would make them happy, but this is just consequential, not directly affecting the bottom-line.
I would say (1) is not such a good idea financially in the long run. Better to have a steady stream of income than a glut, and then a trickle.
(2) and (3) are the right idea, and if we are changing the framework, might as well go all the way technologically and go for Direct Withdrawal from a registered bank account. People may not like this too much in the beginning, but in the long run it would be great for smaller clubs that cannot afford to part with $100 in one go, satisfying condition (3) for all clubs not just the rich ones, and satisfying condition (2), saving the USCF from work/costs that can be automated/reduced.
Just a thought.
Luis
Luis, the reason we can offer a lower minimum rating fee with deposit accounts is that we have no external transaction costs associated with them.
It costs us around 25 cents plus a percentage of the amount charged
to do a credit card transaction, and the fees are similar for e-checks.
It has been suggested that we support e-checks and/or something like Pay Pal, and that’s largely a management decision. However, Pay Pal fees are a bit higher than those charged by our credit card processing vendor (and the rumor is that Pay Pal fees are going up soon.)
Yeah, I know. I’m not suggesting credit card, paypal, or other fee services, but I understand that direct EFT from bank account to bank account does not have fees as high as those, if any (individual transactions do not; I’m uncertain about the volume side of it, but it should be much lower in any case).
I’m thinking of the small clubs that cannot put up a $100 deposit, yet could benefit the USCF as far as cost is concerned by doing direct EFT.
Anyway, just an avenue to explore…
(as a side note, most day to day transactions in Europe are direct bank transfers with no cost; maybe we’ll get there some day 
)
Luis, I GUARANTEE you there are transaction costs in bank-to-bank transfers, even in Europe. I have consulted in the banking industry for years, nobody does anything for free there. Those costs may not be passed on to the consumer, but the banks do incur them.
I don’t know if our credit card vendor can do direct EFT transfers, though they can do e-checks. As far as I can tell, those are at least as expensive as credit cards, maybe higher.
If there was a account set up for a minimum rating fee of a $1, the event would need to have 5 or less rated games to be under a $1 minimum rating fee (5 x 0.18 = 90 cents, 6 x 0.18 = $1.08 ). With the online minimum rating fee of a $3, the event would need to have 16 or less rated games to be under a $3 minimum rating fee (16 x 0.18 = $2.88, 17 x 0.18 = $3.06). If the director and organizer wants to have very small events, just to be in the minimum rating fee that is up to them. Having a account set up for very small rated games, just to be in the minimum rating fee would be pointless.
If on the other hand, having an account set up with a smaller rating fee, then the online 18 cents per game would be more important then the minimum rating fee. The rating fee is not that big of an issue, as its’ as low as it should go. With two people in a single game, it would cost each person in the tournament 9 cents for each rated game. Having the rating fees become cheaper, will not make organizers/directors flock to have more events.
Sorry, I mispoke, I meant ‘no cost to the parties (payer, payee) of the transaction’. I lived four years in Europe, and people don’t use checks, they mostly just give each other bank accounts, even to pay for utilities, etc. There’s no fee for such transfers.
Of course everything has a cost, I thought that part was obvious.
But even in that case, the US had a very expensive checking system until this past October, and probably it still is expensive.
EFT still beats having to hire people to deal with volumes of paper and rent/own space. Even though it has a cost, it may lower than the alternatives and preferable, for the banks. Cutting the middle-man (read credit card companies) can only be good.
For example, quick search ‘ach versus credit’
allianceach.com/ach_eft_vs_bankcards.asp
epsiom.com/listing/ACH_VRS_CREDIT_CARD.PDF
vcscheck.net/vcscheck_vs_ach_continue.html
ach-payments.com/achbenefits.htm
achnetwork.com/introtoach.html
Obviously, there are advantages and disadvantages, but my point is that there may be ways to improve automation and reduce costs that do not involve a credit card company taking a credit card cut (%). I’m not saying that this is definitely the way to go, and I’m sure you know far much more about this than I do, just pointing out that there are alternatives.
Regardless, the goals should be well-defined, and that should lead to better weighing of the alternatives. Just wondering what the USCF board has in mind as far as goals go when they talk about ‘deposit accounts’.
Forsythe is absolutely right; the financial incentive for TDs/Affiliates the way it’s presented would not be that great, not great enough to justify. Still, as a TD running an affiliate, it would be great to not have to pay the USCF for individual transactions (bunch them together) and have the ultimate payment be in a convenient automated manner (deposit, credit card, ACH, whatever). I would gladly trade a small financial incentive for convenience when paying if it helps reduce USCF costs at the same time. Of course, financial incentives would be better for such a program to be successful.
There would not be any convenience for the USCF, in fact it would increase the financial cost to the USCF. If a affiliate place $90 into a rating account, that would pay for 500 ratable games (500 X 0.18 = $90.00). That would be a very active affiliate, if it had only 12 tournaments a year, it would need 42 plus ratable games each month just to break over 500 ratable games in a year. On the other hand, having a account with under $100.00 would cost the USCF in the mantance of the system, the accounting cost, the managment of the service. What banks do with checking and savings accounts with low balance is a service cost.