We recently received a question from a merchant about charging their customer’s a “convenience fee” to cover the merchant’s cost of credit card processing vs. accepting checks or cash. The answer is that yes you can add a fee to the transaction to help offset your credit card processing costs if you meet specific guidelines. So we thought we’d share the rules established by MasterCard and Visa regarding whether or not your business can add a convenience fee to your credit card transactions.
General Guidelines For Convenience Fee Assessment
- A convenience fee cannot be assessed in a face-to-face merchant environment.
- A convenience fee cannot be assessed for recurring payments.
- The merchant must provide a true “convenience” in the form of an alternative payment channel outside the merchant’s customary payment channels
- The fee must be disclosed by the merchant to the cardholder as a charge for the alternative payment channel convenience that is provided.
- The convenience fee must be disclosed prior to the completion of the transaction with the cardholder being given the opportunity to cancel if not wanting to pay the convenience fee.
- If a convenience fee is assessed it must be for all payments (Visa, MC, Discover, AMEX, ACH, Check) within a particular payment channel (mail, phone, internet).
- The MasterCard convenience fee can be tiered, % based, or a flat fee. Visa permits only a fixed or flat fee regardless of the amount of the transaction. A merchant who accepts Visa and MasterCard is restricted to a flat convenience fee
- MasterCard allows the separation of the convenience fee transaction from the base transaction amount. Visa does not. Since all convenience fees are required to be assessed equally, a merchant who accepts Visa and MasterCard is restricted to one authorization and clearing transaction.
- A convenience fee must be assessed by the same merchant actually providing the goods and services. A convenience fee may not be assessed by any third party.
These are the current guidelines but are likely to change in the coming months as there has been significant pressure on the card associations to allow more flexibility. As these regulations change we will update our clients, so you know the latest rules regarding convenience fees.
If you meet the guidelines above and would like to add a convenience fee to your transactions please contact your account manager.
