What is a Convenience Fee?

A convenience fee is a charge that businesses may pass on to customers for using a payment method that is not standard for them. For instance, a business that typically accepts cash or checks but also offers credit card payments for convenience may charge an additional fee for that service. This fee is not charged for using a credit card, but for the privilege of using an alternative payment method. Visa®, Mastercard®, and American Express® support convenience fee programs for most businesses, but there are certain exclusions that apply. Therefore, businesses should check with their respective merchant services acquirer to inquire about qualification for each of the available consumer credit card fee programs.

The terms “convenience fee” and “service fee” are generally used interchangeably. However, both refer to separate card programs that are subject to different card brand rules.

A look at general Convenience Fee rules per card brand

The following are the general convenience fee rules for Visa, Mastercard, Discover, and American Express, which vary by card brand.

Visa General Convenience Fee Rules

1. There is no need for merchants to register to charge a convenience fee under general rules. However, they must follow the card brand rules regarding convenience fees. State and local laws may prohibit merchants from assessing convenience fees, so they should consult with their legal counsel for any restrictions. Merchants cannot charge a general convenience fee in a face-to-face environment.
2. A general convenience fee can only be charged for a bona fide convenience in the form of an alternative payment channel, such as mail, telephone, and eCommerce, outside of the merchant’s customary payment channels (not solely for the acceptance of the card). The convenience fee should be clearly disclosed to the cardholder as a charge for the alternative payment channel convenience before the completion of the transaction, and the cardholder should be given the opportunity to cancel the transaction.
3. The general convenience fee cannot be charged if the merchant operates exclusively in a Card-Not-Present (CNP) environment. Only the merchant that provides goods or services to the cardholder can charge the general convenience fee, and the amount must be a flat or fixed amount, regardless of the value of the payment due. The fee must be applicable to all forms of payment accepted in the payment channel and must be included as part of the total amount of the transaction (combined into one transaction).
4. The convenience fee is not required to be printed on a transaction receipt, and it must not be charged on recurring or installment transactions. Examples of recurring charges include, but are not limited to, insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges.

Mastercard General Convenience Fee Rules

Merchants can charge a convenience fee under general rules without requiring any registration. However, they must comply with the card brand rules in this regard. A convenience fee can be charged for an alternative payment channel, such as mail, telephone, or eCommerce. This fee should not be charged solely for card acceptance. Merchants can charge this fee on in-person payments, card-not-present payments, or recurring/ installment payment transactions. Examples of recurring charges include insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges. However, merchants should consult their legal counsel for any state or local laws that may prohibit them from assessing convenience fees.

1. The convenience fee can be charged by various merchants under most merchant category codes. It must be disclosed clearly to the cardholder as a charge for an alternative payment channel convenience. The fee amount must be the same for all applicable forms of payment accepted in the payment channel. It can be charged by the merchant or third-party service provider that provides goods or services to the cardholder.
2. The fee can be a flat amount, percentage of, or tiered, based on the transaction amount. However, the fee must not discriminate against or discourage the use of Mastercard cards in favor of any acceptance brand deemed by Mastercard to be a competitive brand (i.e. Visa, Amex, and Discover). The fee may be combined into one transaction or submitted as two separate transactions.
3. The convenience fee must be disclosed before the completion of the transaction, and the cardholder must be given the opportunity to cancel. However, it is not required to be printed on a transaction receipt.

Mastercard Convenience Fee Program for Education and Government Entities:

1. Participating in the Mastercard Government/Education Convenience Fee Program does not require registration. However, merchants using this program must follow specific rules concerning convenience fees for Mastercard transactions.
2. Merchants should be aware that state and/or local laws may prohibit them from assessing convenience fees, and they should consult legal counsel for guidance.
3. Convenience fees are only allowed for a limited number of merchants under certain category codes: Elementary Schools, Colleges/Universities, Courts Fines, Misc. Government, and Taxes.
4. Convenience fees must be clearly disclosed to the cardholder as a charge for the alternative payment channel’s convenience.
5. Before completing the transaction, the convenience fee must be disclosed, giving the cardholder the opportunity to cancel the transaction.
6. Convenience fees can apply to any transaction, including in-person, Mail Order/Telephone Order, internet, or kiosk.
7. The convenience fee can be a flat amount, percentage-based, or tiered, based on the transaction amount. It must not discriminate against or discourage the use of Mastercard cards in favor of any acceptance brand deemed by Mastercard to be a competitive brand (such as Visa, Amex, and Discover).
8. The fee applies to in-person payments or recurring/installment payment transactions, such as insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges.
9. Convenience fees may be combined into one transaction or submitted as two separate transactions. For education/government merchants, submitting the convenience fee as a separate transaction is highly recommended.
10. The convenience fee is not required to be printed on a transaction receipt.
11. The convenience fee may differ for each payment type. For instance, the convenience fee for consumer debit and commercial debit cards may differ from the convenience fee assessed for consumer credit cards and commercial credit cards, provided that the convenience fee for consumer credit and commercial credit cards is the same.
12. The convenience fee cannot be higher than any other card-based payment.
13. The fee can differ across payment channels, such as POS, Web, and phone.
14. The merchant or third-party service provider that provides goods or services to the cardholder can charge the convenience fee.

American Express General Convenience

Regulations – U.S. 2018 Guide

1. Merchants can charge a convenience fee under general rules without requiring registration. However, they must follow the card brand rules regarding convenience fees.
2. Some state and/or local laws may prohibit merchants from assessing convenience fees. Therefore, it’s important for merchants to consult their legal counsel for any restrictions.
3. Merchants from various categories can charge the convenience fee under most merchant category codes.
4. Merchants must disclose the convenience fee clearly to the cardholder as a charge for the alternative payment channel convenience. Also, they must disclose the fee before the completion of the transaction and provide the cardholder with an opportunity to cancel.
5. The fee amount should be the same for all applicable payment forms accepted in the payment channel.
6. Merchants can charge the fee on in-person payments or recurring/installment payment transactions. Examples of recurring charges include, but are not limited to, insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges.
7. Merchants can combine the fee into one transaction or submit it as two separate transactions.
8. The fee amount can be a flat, percentage, or fixed amount based on the transaction amount.
9. The convenience fee is not required to be printed on a transaction receipt.
10. Merchants or third-party service providers that provide goods or services to the cardholder can charge the fee.

For American Express Convenience Fee Program for Education and Government Entities:

1. Merchants can charge a convenience fee without requiring registration. However, they must follow the American Express merchant regulations and rules regarding convenience fees.
2. Merchants should consult their legal counsel for any restrictions related to state and/or local laws.
3. A limited number of merchants under certain category codes (Schools, Colleges/Universities, Courts Fines, Misc. Government) can charge the convenience fee.
4. Merchants must disclose the convenience fee clearly to the cardholder as a charge for the alternative payment channel convenience. Also, they must disclose the fee before the completion of the transaction and provide the cardholder with an opportunity to cancel.
5. The fee amount should be the same for all applicable payment forms accepted in the payment channel.
6. Merchants can charge the fee on in-person payments or recurring/installment payment transactions. Examples of recurring charges include, but are not limited to, insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges.
7. The convenience fee must appear as two separate charges on the cardmember’s statement. Program merchants must obtain separate authorizations and approval codes for each of the payment charge and the convenience fee.
8. The fee amount can be a flat, percentage, or fixed amount based on the transaction amount.
9. The convenience fee is not required to be printed on a transaction receipt.
10. Merchants or third-party service providers that provide goods or services to the cardholder can charge the fee.

Discover General Convenience Guidelines

1. Merchants can charge a convenience fee under general rules without requiring registration.
2. Merchants should consult their legal counsel for any restrictions related to state and/or local laws.
3. Merchants must treat Discover cardholders equally and not discriminate against the use of Discover card. Therefore, not charging a convenience fee for a Visa transaction but assessing one for Discover would violate this rule.
4. Merchants can comply with the Discover requirements for convenience fees by following the Visa Convenience Fee general rules.
5. The fee can be charged on in-person payments or recurring/installment payment transactions. Examples of recurring charges include, but are not limited to, insurance premiums, subscriptions, internet service provider monthly fees, membership dues, and utility charges.
6. The fee amount can be a flat, percentage, or fixed amount based on the transaction amount.