Convenience Fees – What Are They, and Can You Charge Them


Before we get into the topic of what a convenience fee is and whether or not it’s something you can use, it’s important to understand that a convenience fee is not to be used a method of passing credit card processing charges to customers. As we’ll explain later, a convenience fee may only be charged for a bona fide convenience for providing a payment method outside of a merchant’s normal business practice.

What is a convenience fee?

It varies slightly from one card brand to the next, but a convenience fee is basically a charge in addition to the original transaction amount for the privilege of being able to use an alternate payment method. It sounds like the same things as a surcharge, but it’s not that easy.

By VISA’s guidelines, surcharges are different than convenience fees. By MasterCard’s definition “any fee charged in connection with a Transaction that is not charged if another payment method is used” is a surcharge. So technically, VISA says that convenience fees and surcharges are different and MasterCard says they’re the same thing. Are you confused yet? Don’t worry, we’ll explain in more depth later on.

Surcharging customers for paying with a credit card is considered discrimination based on payment type. A convenience fee is a charge for offering customers another payment option that is separate and in addition to standard payment methods.

For example, a retail store that takes credit cards, cash and checks as payment can’t charge a convenience fee on credit card transactions. This would be considered payment method discrimination because credit card payments are not offered as a bona fide convenience and the fee isn’t applied to all methods of payment.

On the other hand, a utility company that primarily accepts payment via mail could charge a convenience fee on in-person credit card payments that they offer as a bona fide convenience to customers.

Can I charge a convenience fee, and if so, under what circumstances?

Different card brands have different rules on convenience fees, but VISA provides the most thorough guidelines.


(source: Card Acceptance and Chargeback Management Guidelines for VISA Merchants)

VISA states:

For merchant who offer an alternative payment channel (i.e., mail, telephone, or e-commerce) for customers to pay for goods or services, a convenience fee may be added to the transaction amount. If the merchant chooses to asses a convenience fee to its customers, the merchant must adhere to the following rules:

* The fee is being charged for a bona fide convenience of using an alternate payment channel outside of the merchant’s normal business practice

The Fee:

– Must be disclosed to customers as a charge for alternate payment channel convenience
– Is applied only to face-to-face transactions
– Must be a flat or fixed amount regardless of the amount of payment due
– Is included as part of the total transaction
– Cannot be added to recurring transactions
– Is assessed by the merchant that provides goods and services to the cardholder and not by a third party

* The customer must be given the opportunity to cancel prior to the completion of the transaction

If you do fall into the business category that can charge a convenience fee on VISA transactions, you’ll notice that in addition to the other rules, the fee must be a flat rate regardless of the order total.

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