Credit card convenience fees 2018 rules explained.
What’s a convenience fee and when can I use it? Convenience fees can only be charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card. If a merchant only accepts credit cards, it’s prohibited. Alternatively as an example, if a merchant gets 99% checks in the mail, ACH, and wire, they could be eligible to charge a convenience fee.
The following are all elements that can impact whether you can charge a convenience fee:
- Federal law
- State law
- Rules of card acceptance, for example, Visa Core Rules
- Merchant acquirer (credit card processor)
Who can and cannot charge a convenience fee?
- If the Merchant operates exclusively in a Card-Absent
Environment, cannot charge a convenience fee.
- Convenience fee can only be charged by the merchant that provides the goods or services to the cardholder, not a third party.
Visa convenience fee rules excerpts:
- Cannot be charged on a Recurring Transaction or an Installment Transaction.
- Must be listed as a separate line item on the receipt.
- Must be included with the total transaction. In other words, the receipt must split out the amount, but only one transaction is sent.
- Added only to a domestic Unattended Transaction. In other words, they self-pay.
- Must be disclosed to customers as a charge for alternate payment channel convenience.
How much is allowed for a convenience fee?
Per Visa, the convenience fee must be a flat, or fixed amount, regardless of the value of the payment due. There isn’t a limit on the amount and a merchant may choose to dynamically generate the convenience fee amount. Regardless, the consumer must be able to opt-out prior to completing the transaction.
Rules may vary by card brand. A convenience fee is not the same as a credit card surcharge for Visa, which also has another type called a service fee,which applies to government and education only. MasterCard has only this to cite in their rules:
Call Christine Speedy, PCI Council QIR certified, for simple solutions to complex payment transaction problems, 954-942-0483, 9-5 ET. CenPOS authorized reseller based out of South Florida and NY. CenPOS is an integrated commerce technology platform driving innovative, omnichannel solutions tailored to meet a merchant’s market needs. Providing a single point of integration, the CenPOS platform combines payment, commerce and value-added functionality enabling merchants to transform their commerce experience, eliminate the need to manage complex integrations, reduce the burden of accepting payments and create deeper customer relationships.
Please share your convenience fee insights for others and ask any questions below.