Surcharge and Convenience Fees
April 17, 2024
Description
Overview of surcharge and convenience fees and rules for merchant use
Convenience and surcharge fees may be charged by a merchant when a customer pays with an electronic payment to move the cost of processing the transaction to their customer. There are specific rules in place related to when a merchant may pass on their processing fees.
Convenience Fees
Convenience fees apply to internet transactions (e-commerce) where providing the option to pay online instead of providing a check or cash payment is a "convenience" to the customer. Applying a convenience fee may assist in covering the payment processing charges for online transactions and must apply to all card types.
- Convenience Fee Rules & Requirements
- The consumer must always have an alternative method of payment available that does not include a convenience fee (pay in person with cash, accept a check, etc.)
- Each card brand has its own rules. Visa has the most documented guidelines surrounding charging convenience fees:
table listing the card brands and their key rules| Card brand | Key rules |
|---|
| Visa | · Can only be charged online
· Cannot be charged if merchant is only doing business online
· Must disclose clearly and provide ability for cardholder to cancel the payment
· Fee must be included in the total amount of the transaction and not charged separately
· Fee must be a flat or fixed amount, regardless of the total amount due
· Cannot charge for recurring transactions or installment transactions
· Cannot charge both a convenience fee and a surcharge
https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf (see Section 5.5) |
| Mastercard | Only allows convenience fees for government and education entities |
| America Express | Must disclose the fee to the cardholder and not discriminate against the use of the American Express card. For example: The merchant cannot charge a convenience fee for American Express but not for Visa or other card brands. |
| Discover | Must not discriminate against the use of the Discover card. For example: the merchant cannot charge a convenience fee for Discover but not for Visa or other card brands. |
Surcharge
A surcharge adds a fee to a credit card transaction to cover the merchant’s costs for processing the payment. Merchant Services through Bank of America does not support any form of surcharging on any POS device or application.
Resources
https://usa.visa.com/support/small-business/regulations-fees.html
https://www.mastercard.us/en-us/business/overview/support/merchant-surcharge-rules.html