The convenience fee is an additional value the merchant assesses the customer when s/he chooses to pay by card. So, when the customer prefers the card payment to cash or check, the convenience fee appears. Take a look at the term once again. Basically, the customer pays for the convenience.

Why does companies charge a convenience fee?

Convenience fees are charged by businesses to cover the cost they pay to payment processing companies for when a customer pays by credit card. A convenience fee is different to a surcharge, which is a charge simply for just using a credit card. Surcharges are illegal in some states.

How do you avoid a convenience fee?

Yes. You can avoid convenience fees by making payments to the University online by electronic check (sometimes referred to as an ACH transfer or a direct debit) or by paper check or a money order sent via U.S. mail. You may also pay in-person by cash, paper check or money order.

How are convenience fees passed on to customers?

There is one sure way for merchants to recoup credit card charges, and that is by passing the cost down to customers, either via surcharges or convenience fees. We already have an article explaining surcharges, so this article focuses on convenience fees. *Our preferred processors use fully transparent Interchange-plus pricing.

Can a business charge a credit card convenience fee?

If your business only accepts Discover, MasterCard, and American Express: You can charge a credit card convenience fee on both card-present and card-not-present credit and debit transactions so long as: The fee is only charged for a bona-fide convenience outside of the typical payment channels and sales process.

Is it illegal to charge a convenience fee?

There are a few states which have deemed convenience fees illegal: Colorado, Connecticut, Kansas, Maine, Massachusetts, Oklahoma and Texas. They are also not permitted in Puerto Rico. If you are collecting a payment in any of these states, you cannot charge a fee.

What’s the difference between a convenience fee and a surcharge?

Surcharges are when you charge a fee to customers for using a credit card. Convenience fees are when you charge a fee to customers for the convenience of paying outside of your usual channel (for example, paying over the phone) no matter what payment method they use.