There are many factors that determine whether a particular business is able to incorporate the use of free payment processing, or the no cost to biller model, in order to offset the cost of accepting credit and debit cards. It is best to contact a payment processing specialist, like Payment Savvy, for an in depth review of the rules.

Payment Savvy will inform you if charging convenience fees will work for your business, and how they should be applied. In the meantime, please use the following information as a guide. Organizations can use a free payment processing system/charge a convenience fee to customers that use a credit or debit card to pay for goods or services based on the following set of rules.

How to Establish a Convenience Fee Model (Free Payment Processing)

  • The convenience fee is explained to the customer in language that is easy to understand as a fee for the services being provided to them. In this case the service being provided is the option to use a credit or debit card for payment as opposed to paying with an alternate payment method.
  • The convenience fee is explained to the customer prior to the transaction being finalized. If the customer chooses not to pay the convenience fee, they can pay using an alternate payment method.
  • The convenience fee is a fixed amount. It cannot be a percentage of the bill being paid.
  • The convenience fee cannot be charged in a card not present situation where it is impossible to pay with cash. In essence, online only businesses are not allowed to charge a convenience fee.
  • The convenience fee can only be charged when the business is technically providing a convenience to the customer by allowing them to use a credit or debit card to pay the bill.
  • The convenience fee must be applied to all payment methods across a particular payment channel. For example, if a utility company charges a convenience fee for web and phone based credit card payments, they must also charge a convenience fee for web and phone based ACH payments.
  • The convenience fee cannot be charged to customers that are paying in person.
  • The convenience fee cannot be charged on recurring payments.
  • The convenience fee is illegal in ten (10) states. They include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Convenience fees are also not allowed in Puerto Rico.

Please keep in mind that each of the major credit card companies, including American Express, Discover, Master Card, and Visa has different rules regarding convenience fees. Your Payment Savvy representative will review the specifics with you. There are some serious consequences when convenience fees are applied to customer credit or debit card transactions in an improper manner. Companies that fail to follow the rules by the major credit card companies risk losing the ability to accept credit and debit card payments.

Organizations may also find themselves in legal trouble as well. Charging convenience fees in states that do allow it, or failure to disclose the terms of the fee is illegal.

Payment Savvy specializes in providing clients with creative and efficient methods of doing business. Please contact Payment Savvy today for answers to your questions, to review all of your options, or to apply for a free payment processing merchant account. We look forward to hearing from you and working with your company.

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No Cost to Biller, Convenience Fee, Free Payment Processing