Merchant Card Service - Resources - Surcharge vs. Convenience Fee

Visa and Mastercard strongly prohibit merchants from charging a surcharge to cardholders who use their credit cards for purchases. However, the Associations do make a distinction between a surcharge and a convenience fee. A convenience fee is allowed provided it meets the requirements as described below.

Here are some guidelines to help educate you on the difference between a surcharge and a convenience fee, as interpreted by the associations:

• A surcharge is charged only to credit card sales and, therefore, disadvantages the cardholder as a fee for the privilege of using a credit card. This is prohibited by the associations.
• A convenience fee is charged to all payment methods. The payment method must provide a convenience, is in a non-face-to-face environment, and is outside the merchant's normal payment channel. For example: a convenience fee is typically charged to customers who pay over the phone, but not to customers who go into the store or office. The convenience fee does not relate to the form of payment(i.e. credit card) but rather how the payment is occurring.
• According to Visa, the convenience fee must be a fixed amount regardless of the amount paid; it cannot be a percentage of the amount paid or based on a sliding scale of the amount paid. This differs from MasterCard, which does permit percentage based and tiered rate convenience fees.
• The convenience fee must be disclosed to the cardholder prior to completion of the transaction.
• Convenience fees cannot be advertised by the merchant as an offset to the cost of accepting credit cards.
• There are other fees that may be added to a transaction such as handling fees or processing fees. These fees are not part of the credit card acceptance and are added regardless of payment. One example would be ticket fees added by TicketMaster.
• A convenience fee may only be charged by the merchant that actually provides goods or services to the cardholder.  A convenience fee may not be charged by any third-party.