Anna Baluch is a freelance writer from Cleveland, Ohio. She enjoys writing about a variety of health and personal finance topics. When she's away from her laptop, she can be found working out, trying new restaurants, and spending time with her family.
Anna Baluch ContributorAnna Baluch is a freelance writer from Cleveland, Ohio. She enjoys writing about a variety of health and personal finance topics. When she's away from her laptop, she can be found working out, trying new restaurants, and spending time with her family.
Written By Anna Baluch ContributorAnna Baluch is a freelance writer from Cleveland, Ohio. She enjoys writing about a variety of health and personal finance topics. When she's away from her laptop, she can be found working out, trying new restaurants, and spending time with her family.
Anna Baluch ContributorAnna Baluch is a freelance writer from Cleveland, Ohio. She enjoys writing about a variety of health and personal finance topics. When she's away from her laptop, she can be found working out, trying new restaurants, and spending time with her family.
ContributorCassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Cassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Written ByCassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Cassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Updated: Jun 12, 2024, 8:27pm
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While it’s usually a good idea to accept credit card payments, doing so can be expensive. That’s where convenience fees come in; by charging convenience fees to your customers, you may recoup some of the credit card processing costs. Keep reading to learn more about convenience fees and how they work so that you can decide if they make sense for your unique business.
A convenience fee is a charge you pass on to your customers for using a payment method that is not standard for your business. For example, let’s say you run a movie theater and typically sell tickets at the box office, where you can accept cash and may have a low-cost credit card processor. If you also allow customers to buy tickets online via credit card, you may choose to tack on a convenience fee to help cover the costs of the website and processing fees.
With a convenience fee, you can accept nonstandard payments without having to absorb their full cost. If you’d like to impose one, you’ll need to contact your credit card processing company. It can explain the rules and inform you of how much you can charge for the fee.
Convenience fees are legal in the United States. But if you decide to charge one, it will need to be a flat fee, such as $1 per transaction instead of a percentage of the transaction amount, such as 1% of the total amount. This fee cannot exceed 4% of the total transaction. If your business only makes sales online, you’re not permitted to charge a credit card convenience fee.
While there are rules on how you can charge convenience fees, they vary by credit card company. Visa, for example, allows convenience fees if your customers are using a nonstandard payment method out of convenience. This means you can’t charge a convenience fee just because a customer is using a Visa credit card; it would have to be abnormal for you to process the card.
Unlike Mastercard, Visa doesn’t permit convenience fees on transactions in which the card isn’t present. It also has rules against convenience fees on recurring transactions for purchases such as monthly transactions. Mastercard and American Express, however, do allow them. To understand the exact rules regarding convenience fees for your credit card processor, check your agreement or reach out to them directly.
As a small business, you should consider the pros and cons of convenience fees before moving forward with them. Here’s a brief overview of some of the most noteworthy benefits and drawbacks.
While the terms “convenience fees” and “surcharges” often get used interchangeably, they’re not the same. Credit card surcharges are optional fees you may add when customers use credit cards to pay for their purchases at checkout. If you do tack on surcharges, you must follow certain protocols to ensure you’re completely transparent about them. Some credit card issuers also prohibit them on debit cards or prepaid debit transactions. Surcharges are also illegal in some states.
Credit card convenience fees, however, can only be charged in certain cases and will vary by credit card company. They’re designed to compensate your business for accepting payment methods that are considered nonstandard or nontraditional. Allowing customers to submit payments by mail-in form or over the phone, and thus requiring an employee to handle the transaction outside of a traditional checkout process, may justify a convenience fee.
It’s no surprise that some customers are displeased with convenience fees and believe the business should cover the costs of accepting nonstandard payments. To encourage these customers to purchase from you, you can reward them with promotions or coupons for paying in cash or through the traditional method. For instance, some merchants choose to simply raise their prices to offset costs, then offer a discount to consumers willing to pay in cash.
You may also want to look for cheaper credit card processing as every company has its own pricing structure. If you shop around and compare your options, you might be able to save some money and avoid charging convenience fees.
