Convenience Fees: Charging Customers to Pay With Credit Card

Dayton Uttinger  | 

As credit cards become more and more common, convenience charges can seem a bit over-the-top at first glance. Businesses certainly benefit from customers being able to purchase their goods or services easier, and credit cards definitely accomplish that. So why do certain businesses charge convenience fees regardless?

What Is a Convenience Fee?

First, let’s look at what a convenience fee even is. Businesses charge a convenience fee for the ability to use a not-standard form of payment. So it’s not technically a charge for using a credit card, but it often amounts the same thing.

A movie theater might charge a convenience fee for buying tickets online, since they normally sell tickets in the physical box office. A convenience fee only applies if there is an alternative option to pay for the goods or services.

Why Do Businesses Charge Convenience Fees?

Businesses actually pay to accept credit cards. Charging convenience fees helps offset their processing costs. Most businesses account for this while setting their prices, but there are exceptions. The movie theater probably won’t charge you a convenience fee if you paid with a card at the box office, but they might if you buy them online. Consider that all ticket sales that happen online are only by credit or debit card, so can be a huge rise in fees that the business will have to pay as well.

Charging a convenience fee can be a smart move for a business if it offsets some of their processing fees, however you risk upsetting your customers. They likely won’t appreciate the additional expense, and they definitely won’t think that it’s convenient. Seriously consider whether or not you can risk the backlash of customers for charging convenience fees.

Is It Legal to Charge a Credit Card Processing Fee?

The short answer is yes, it is legal to charge a credit card processing fee. However, it has to be done in a specific way.

Convenience Fees vs Surcharges

Surcharges are fees for simply using a credit card. A convenience fee is only charged if the business is providing an alternative form of payment outside of their usual practices. It’s a very fine distinction, but it makes all the difference for businesses and the credit card industry.

Keep in mind that a surcharge is only when there is an additional fee for using your credit card. There is nothing wrong with offering a discount for using cash, and many businesses exploit this loophole.

Surcharges are generally looked down upon, but they are actually illegal in ten states:

  • California
  • Colorado
  • Connecticut
  • Florida
  • Kansas
  • Maine
  • Massachusetts
  • New York
  • Oklahoma
  • Texas

Credit Card Network Convenience Fee Policies

The credit card network (Visa, MasterCard, Discover, and American Express) all have policies concerning how convenience fees should be handled.

Visa

Visa disallows surcharges and mandates that all of the below are true in order for a business to charge a convenience fee:

  • The transaction takes place over an alternative payment method (by phone or online).
  • The business must inform the customer beforehand about the fee.
  • The fee must be a set price, not a percentage.

MasterCard

MasterCard allows convenience fees to be a set price or a percentage. Similar to Visa, they also ban surcharges.

Discover

Discover has no official policy on convenience fees. They only demand that businesses treat all credit cards the same, so they end up benefiting from the same rules that the others set.

American Express

American Express asks that the business discloses the convenience fee beforehand, and that there must be an actual convenience provided in order to justify the charge.


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Dayton is a chronic Wikipedia addict, which is detrimental to her social life but stellar for her writing. She resides in Boise, ID, surrounded by her own frantic outlines, highlighted encyclopedias, and potatoes. The latter was not by choice.

This post was updated December 5, 2018. It was originally published December 5, 2018.