Parents with children on youth sports teams have a lot to keep track of, not the least of which is payments for the fees associated with competitions.
Traditionally, the coaches or treasurers of these associations end up taking cash or paper checks from parents — sometimes at games or practices — and reconcile those payments at some point. Living in a hotbed of youth traveling teams in Southern California, Bill Lennon saw a need for the teams and parents to handle their payments online.
He created automatic payment and notification software called Groundwork last summer and has seen more than 100 clubs and 500 teams representing 6,000 parents and 9,000 players sign up.
"Our goal is ultimately to be the PayPal of youth sports," said Lennon, Groundwork's CEO. "That is what I want to be known for, and I want us to be that go-to thing."
It is not surprising that software developers and mobile payment startups look upon the youth sports world as an open greenfield. With the proliferation of year-round clubs and training camps, Time magazine estimated it to be a $15 billion industry nationwide. Many find a specific niche, such as mobile payment methods for youth hockey.
Lennon chose traveling soccer, basketball, baseball and others, but he also built Los Angeles-based Groundwork to be mindful of its own fees and usability.
"Most clubs in this space are non-profit and they don't like to eat a high percentage of a payment through an online fee, so they figured they would just keep collecting cash or checks," Lennon said.
Groundwork has different pricing levels based on non-profit or for-profit operations, as well as payment options that include using cards, with a small fee attached, or using bank accounts through ACH for free.
In the non-profit model, clubs pay no transaction fees, but parents who choose to pay by card pay 3.9%, plus a 30 cent base fee. In the for-profit model, clubs pay 2% plus 30 cents on all transactions, and parents paying with a card pay 2.9%.
Groundwork also allows league organizers the option of adding payments during the season. It's a feature other services do not provide, he said.
"Teams know the registration fee in the beginning of the season, but they don't always know what tournaments they are going to and what the costs may be," Lennon said. "There may be a need for coaches to collect $50 from each player to participate in a tournament, and sometimes they don't know about this until just a week before."
Groundwork has "figured out a niche to support back-office aspects of the payment environment and coupled it with an option that will feel like a person-to-person payment for its users," said Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm.
"It is all of that back-office servicing that causes problems in these types of leagues," Arminio said. "This is not something trying to compete with a P-to-P service, but it is a twist on remittance that focuses on the back-office engine to facilitate payments from parents."