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The world may prefer cards, but for many merchants, the fees for accepting them eat into critical profit margins. Sadly, cash use is down year on year, and no credit card transaction is free. In 2021, cash payments accounted for 20% of all transactions, falling 6% from 2019.

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But it’s not consumers who automatically pay that price. For the most part, business owners shoulder the brunt of credit card processing costs.

Some large retailers have the negotiating power to demand lower fees from banks and card networks. But for small businesses, credit card processing fees are often non-negotiable.

The good news is that if you must accept credit card purchases, you do have a way to offset the costs. You can charge a convenience fee. This post offers credit card convenience fee wording suggestions and tips to help you communicate your policies to customers.

What Is a Credit Card Convenience Fee?

Convenience fees are charges that businesses may add to a customer’s purchase for the privilege of letting them pay using a non-standard (or alternate) payment method. For example, if in-person payments are the norm for a business, they may charge a convenience fee to customers who pay online or over the phone.

When you charge a convenience fee, you’re essentially trying to pass along the processing costs associated with accepting credit cards (and other non-standard forms of payment) to your customers.

Note that convenience fees are not the same as credit card surcharges or service fees. A surcharge is a convenience fee specifically meant to cover the costs associated with a credit card transaction, while a service fee is restricted to only certain types of government or education merchants.

Rules for Implementing Convenience Fees

The specific requirements for convenience fees can differ across card brands, but three rules are consistent in each location.

Charge limits

All credit card brands—Visa, Mastercard, American Express, Discover, etc.—have slightly different rules around how much you can charge. However, the convenience fee must always be a fixed amount and not a percentage of the transaction value.

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Review your state laws and your card issuers’ requirements and ensure you abide by their guidelines.

Customer notification

You must clearly and conspicuously notify your customers that convenience charge fees will be applied before they complete their purchase. All of the credit card companies will have guidelines on how this has to be communicated, including ample signage in-store and near the point of sale.

The notification must include:

  • The amount of the fee
  • That the fee is for the use of an alternate payment method
  • The type of payment methods to which the fee applies.

Itemized billing

You must disclose the convenience fee to customers before they complete a purchase and include the total dollar amount as a separate line item on their receipt or invoice. The customer should never be surprised by the fee. Furthermore, they should be allowed to cancel the payment and pay via a different method if they so wish.

How to Notify Customers about Convenience Fees

For customers, these additional charges can seem unfair and confusing. That’s why communication is so important. Here are three scripts you may want to use to notify your customers about an upcoming convenience fee:

In-person: “There will be a $3 flat fee for online payments and credit cards. Would you like to use cash or another form of payment?”

Online: “By selecting ‘credit,’ you agree to pay a $3 convenience fee.”

Over the phone: “I’m happy to process your credit card payment, but please be aware there is a $3 convenience fee.”

The key is to be transparent about the fee and deliver the information confidently. If customers have any queries, you can explain why it’s being charged (e.g., you’re a small business, and you need to offset the fees). 

You should also give the customer a chance to use another form of payment if they object to the fee. For example: “If you would prefer to use another form of payment, such as cash or debit, this fee would not apply.”

If you wish to put up your own signs in store, they could read something like:

Notice: A $3 flat fee applies when using a credit card for payment. Cash and debit cards are accepted without this fee.”

Again, be sure to follow your state’s guidelines around sign placement and visibility.

The Bottom Line

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Charging a convenience fee is one way to offset the high costs of credit card acceptance, but it’s not the only way. You can also review your current payment processing agreement to see if you’re being overcharged and consider switching to a more affordable payment processor.

Payment Depot offers transparent and affordable credit card processing fees.

Payment Depot streamlines your credit card transactions by equipping you with the latest payment technologies and terminals. Plus, with Payment Depot, you won’t encounter hidden fees thanks to our transparent, interchange plus pricing model, ensuring you always know what you’re being charged. Contact us to get started today.

Payment Depot streamlines your credit card transactions by equipping you with the latest payment technologies and terminals. Plus, with Payment Depot, you won’t encounter hidden fees thanks to our transparent, interchange plus pricing model, ensuring you always know what you’re being charged and what interchange rates are. To see how much you could be saving, contact Payment Depot today.


Quick FAQs about Credit Card Convenience Fee

Q: What is a credit card convenience fee?

A credit card convenience fee is an additional charge that businesses may add to a customer’s purchase for the privilege of paying using a non-standard payment method. This fee helps merchants offset the processing costs associated with accepting credit cards.

Q: How does a convenience fee differ from a surcharge?

While both convenience fees and surcharges help cover credit card processing costs, they are applied differently. A convenience fee is charged for using an alternate payment method, such as paying online or over the phone, whereas a surcharge is specifically for credit card transactions and is added to the transaction amount.

Q: Are convenience fees legal in all states?

Yes, convenience fees are legal in all states, unlike surcharges which are prohibited in some states. However, businesses must adhere to specific guidelines regarding the notification and disclosure of these fees.

Q: What are the rules for charging a convenience fee?

The rules for charging a convenience fee include ensuring the fee is a fixed amount, clearly notifying customers before the purchase is completed, and itemizing the fee separately on the receipt or invoice. Each credit card brand may have slightly different requirements, so it’s important to review their guidelines.

Q: How should businesses notify customers about convenience fees?

Businesses must clearly and conspicuously notify customers about convenience fees before the transaction is completed. This can be done through ample signage in-store, clear messaging during online checkout, or verbally over the phone.

Q: Can a business charge both a convenience fee and a surcharge?

No, businesses cannot charge both a convenience fee and a surcharge for the same transaction. They must choose one method to offset the credit card processing costs.

Q: What should a convenience fee notification include?

A convenience fee notification should include the amount of the fee, the fact that the fee is for using an alternate payment method, and the types of payment methods to which the fee applies.

Q: Can customers avoid paying a convenience fee?

Yes, customers can avoid paying a convenience fee by choosing to pay with standard methods such as cash, debit, or ACH. Businesses should offer these alternatives and communicate them clearly to customers.

Q: What are some effective scripts for notifying customers about convenience fees?

Here are a few examples:

– In-person: “There will be a $3 flat fee for online payments and credit cards. Would you like to use cash or another form of payment?”

– Online: “By selecting ‘credit,’ you agree to pay a $3 convenience fee.”

– Over the phone: “I’m happy to process your credit card payment, but please be aware there is a $3 convenience fee.”

Q: How can small businesses ensure they comply with convenience fee regulations?

Small businesses should review their state laws and credit card issuer requirements regarding convenience fees. They should also ensure transparent communication with customers and provide clear notifications about any fees before completing transactions.