In the payments ecosystem, Convenience Fee models are rising in popularity, but many merchants and agencies are unaware that the card-brands have issued explicit rules on how these fees may be applied.
If you are currently deploying a Convenience Fee-based payment model, you should take care to review these card-brand rules.
- Charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card
- Added only to a Transaction completed in a Card-Absent Environment
- Not charged if the Merchant operates exclusively in a Card-Absent Environment
- Charged only by the Merchant that provides goods or services to the Cardholder
- Applicable to all forms of payment accepted in the payment channel
- Disclosed clearly to the Cardholder
- A flat or fixed amount, regardless of the value of the payment due
- Included as part of the total amount of the Transaction and not collected separately
– As a charge for the alternative payment channel convenience
– Before the completion of the Transaction. The Cardholder must be given the opportunity to cancel.
- Not charged in addition to a surcharge
- Not charged on a Recurring Transaction or an Installment Transaction.
The eighth rule in this list is where serious risks of non-compliance frequently arise. According to Visa’s rules, Convenience Fees have to appear (and be processed and authorized) as a single transaction by the merchant of record. Solutions which process convenience fees as two separate transactions are therefore non-compliant, and can compromise your merchant account.
If you’re currently deploying or considering a convenience fee model, be sure to ask your payment provider whether they process convenience fees as a single transaction or a separate transaction. If the convenience fee solution involves running the convenience fee as a separate transaction, you may be at risk of losing your merchant processing account and compromising your ability to accept payments altogether.
Many popular solutions are not fully compliant with card brand rules, which is why it is crucial to have a thorough understanding of these requirements to ensure that your provider’s solution is compliant. Fully compliant programs do exist that can minimize your business risk while reducing your payment acceptance costs.
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