The rule for convenience fees requires businesses to disclose the fee before payment, ensure it's optional, and not a surcharge on the transaction amount. The fee must cover the cost of a specific service, and businesses must comply with regulations, ensuring transparency and fairness in its application.
Q: Are there any states where credit card surcharging is prohibited? Yes, as of the latest updates, credit card surcharging is prohibited in Massachusetts, Connecticut, and Puerto Rico. Merchants must stay informed of changing laws to ensure compliance.
No. The ability to surcharge only applies to credit card purchases, and only under certain conditions. U.S. merchants cannot surcharge debit card or prepaid card purchases.
Under California law, landlords are generally prohibited from charging tenants convenience fees for paying rent by traditional methods such as paper checks. Landlords must provide tenants with at least one no-cost method of paying rent, which typically includes payment by personal check or cashier's check.
Some landlords allow their tenants to pay rent online through a third-party payment system, which may charge a percentage of the rent as a convenience fee. Depending on the terms of your lease, you may be able to avoid these fees by paying with a check, money order, cash, or other form of non-online payment.
That's because credit cards are more expensive to process than credit cards. Renters can avoid these convenience fees by paying by ACH transfer or electronic check, with the funds coming directly from their bank accounts.
There is no prohibition for credit card surcharges and no statute on discounts for different payment methods. Merchants can impose a surcharge as long as it doesn't exceed the cost of the merchant's processing fee. Merchants may offer discounts for payment by cash, check or other methods unrelated to credit cards.
TL;DR. Card brands such as Visa and MasterCard along with state and federal laws prohibit debit card surcharging. Businesses can encourage cash transactions or use credit card surcharging as an additional fee to offset payment processing costs.
Use cash where you can
The easiest way to avoid card surcharges is to pay by cash. While businesses can charge a surcharge for paying by debit or credit cards, they can't charge a surcharge for paying by cash.
A pay-to-pay fee – also known as a convenience fee – is a fee charged by a company when you make a payment through a particular channel. For example, companies sometimes allow you to make a payment in person or by mail for free but charge you a fee for the convenience of taking your payment over the phone or online.
"Convenience of the Employer" Rules
Connecticut, Delaware, Nebraska, New Jersey, New York and Pennsylvania maintain this "Convenience of Employer" rule. In these states, such employees are taxed in the state in which the employer is located, again unless the employer requires such services to be performed out-of-state.
Businesses cannot impose any surcharge for using the following methods of payment: consumer credit cards, debit cards or charge cards. similar payment methods that are not card-based (for example, mobile phone-based payment methods) electronic payment services (for example, PayPal)
You can usually avoid credit card convenience fees by using an alternate payment form, such as cash, check, or electronic payment.
The average credit card processing fees range from 1.5 percent to 3.5 percent of each transaction, according to industry analysts, although the final percentage depends on a host of factors.
Any merchant that accepts multiple payment methods can charge convenience fees for non-standard payment options. This wouldn't include ecommerce only businesses or most transactions in-person, as these would be considered standard payment options.
In addition, the amount of the convenience fee must be a flat rate; it cannot change based on the total payment due. And remember: you must make it clear to the customer that the extra charge is for the convenience of using a different payment method.
California Senate Bill 478, part of the Consumer Legal Remedies Act, bans all “junk fees” on purchases across California. This includes credit card surcharges in most situations.
A surcharge adds an additional fee, tax, or cost to the transaction when customers pay with a card. You can add fees of up to 3% for Visa and 4% of the transaction for Mastercard. Surcharging is not legal in Connecticut, Oklahoma, Massachusetts, and Maine, and some states cap surcharge fees, like Colorado at 2%.
A surcharge is not a convenience fee. A convenience fee is levied by a merchant for offering customers the privilege of paying with an alternative non-standard payment method. Merchants can process convenience fees in all 50 states. A surcharge is levied by a merchant for customer purchases made with a credit card.
Consumer Financial Protection Bureau Releases Final Rule on Credit Card Late Fees, with Overdraft Fees on Deck. On March 5, 2024, the Consumer Financial Protection Bureau (Bureau) announced the final rule governing late fees for consumer credit card payments, likely cutting the average fee from $32 to just $8.
By paying a convenience fee, you gain access to the ease of booking flights from anywhere. Convenience fee is a non-refundable fee applied to all bookings made via our website, app, or call centres. The fee applies to all modes of payment and is charged per customer per ticket.
Additionally, many customers are taking the option to use alternative payment methods to avoid surcharges. In the same study by PYMENTS, 71% of total consumers used cash to avoid the extra fees. Interestingly, Gen Z diners used debit cards 72% of the time to avoid additional fees.
U.S. merchants cannot surcharge purchases made using a Visa debit card or prepaid card. Can I assess a surcharge on debit card transactions where the debit cardholder chooses “credit” on the point- of-sale terminal? No.