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FAQ / Knowledge Base -- Merchant Account Operation -- Convenience Fees: What are They, and Can You Charge Them

Charging a Credit Card Convenience Fee on Transactions


A recent settlement has changed the rules regarding surcharges, and in many cases merchants are now permitted to surcharge credit card transactions. Please click through to CardFellow to learn the latest regarding convenience fees and surcharging.


Before we get into the topic of what a convenience fee is and whether or not it's something you can use, it's important to understand that a convenience fee is not to be used as a method of passing credit card processing charges to customers. As we'll explain later, a convenience fee may only be charged for a bona fide convenience for providing a payment method outside of a merchant's normal business practice.

If you're looking to explore options for passing processing fees to customers, you should read "Charging Customers a Fee to Pay with a Credit Card" and "Can a pass fees to customers by charging them to pay with a credit card?" in the Merchant Account Operation section of our Merchant Account FAQ / Knowledgebase.

Now that we have the formalities out of the way, let's explore convenience fees as they apply to merchant accounts and credit card processing.

What is a convenience fee?

The definition of a convenience fee varies slightly from one card brand to the next, but it's basically a charge in addition to the original transaction amount for the convenience of being able to use an alternate payment method. It sounds like the same things as a surcharge, but it's not that easy.

By VISA's guidelines, surcharges are different than convenience fees. By MasterCard's definition "any fee charged in connection with a Transaction that is not charged if another payment method is used" is a surcharge. So technically, VISA says that convenience fees and surcharges are different and MasterCard says they're the same thing. Are you confused yet? Don't worry, we'll explain in more depth later on.

Surcharging customers for paying with a credit card is considered discrimination based on payment type. A convenience fee is a charge for offering customers another payment option that is separate and in addition to standard payment methods.

For example, a retail store that takes credit cards, cash and checks as payment can't charge a convenience fee on credit card transactions. This would be considered payment method discrimination because credit card payments are not offered as a bona fide convenience and the fee isn't applied to all methods of payment.

On the other hand, a utility company that primarily accepts payment via mail could charge a convenience fee on in-person credit card payments that they offer as a bona fide convenience to customers.

Can I charge a convenience fee, and if so, under what circumstances?

Different card brands have different rules on convenience fees, but VISA provides the most thorough guidelines.

(source: Card Acceptance and Chargeback Management Guidelines for VISA Merchants)

VISA states:

For merchant who offer an alternative payment channel (i.e., mail, telephone, or e-commerce) for customers to pay for goods or services, a convenience fee may be added to the transaction amount. If the merchant chooses to asses a convenience fee to its customers, the merchant must adhere to the following rules:

  • The fee is being charged for a bona fide convenience of using an alternate payment channel outside of the merchant's normal business practice
  • The Fee:
    • Must be disclosed to customers as a charge for alternate payment channel convenience
    • Is applied only to non face-to-face transactions (There is an exception - Please see Visa Tax Payment Program)
    • Must be a flat or fixed amount regardless of the amount of payment due
    • Is included as part of the total transaction
    • Cannot be added to recurring transactions
    • Is assessed by the merchant that provides goods and services to the cardholder and not by a third party
  • The customer must be given the opportunity to cancel prior to the completion of the transaction

If you do fall into the business category that can charge a convenience fee on VISA transactions, you'll notice that in addition to the other rules, the fee must be a flat rate regardless of the order total. This differs slightly form MasterCard's rules.

Visa Tax Payment Program

Visa has a special program for merchants that are certified by their acquiring organization to participate in the Visa Tax Payment Program. According to the Visa Tax Payment Program Guide:

"The Visa Tax Payment Program allows participating merchants to assess cardholder fees on approved tax types. The program allows a fixed convenience fee - not to exceed $3.95 - for Visa consumer debit products and a variable service fee solution for Visa consumer credit and commercial products. The program also offers an incentive interchange rate to participants on consumer debit tax payments."

Please reference the VISA U.S.A Inc. Operating Regulations available from Visa's Web site or contact your acquiring organization or merchant service provider for more information about the Visa Tax Payment Program.

(Source: "MasterCard Rules" Section "5.9.2 Charges to Cardholders")

MasterCard doesn't go into as much detail about convenience fees as VISA. They simply state that:

A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing. For purposes of this Rule:

  • A surcharge is any fee charged in connection with a Transaction that is not charged if another payment method is used.
  • The Merchant discount fee is any fee a Merchant pays to an Acquirer so that the Acquirer will acquire the Transactions of the Merchant.

While the rules for applying a convenience fee are in line with VISA, MasterCard allows a flat, tiered or percentage-based fee structure.


As a result of a Tyler's comment below from December 30, 2009, we looked into MasterCard's convenience fee guidelines surrounding educational and government/municipal merchants. Jim Reed, MasterCard's Vice President of Public Sector Acceptance who developed and manages this program was very quick to respond to our inquiry to confirm that this program is still active.

At the time of this writing the document, "The MasterCard Convenience Fee Program" (document reference #7-125889 Dated: 12/07) is being used to brief merchants about this program. We've linked to this document here at for your convenience. However, MasterCard may change these guidelines in the future. Please be sure reference MasterCard's website the most current documentation.

(Source: "Discover Operating Manual", Section: "2.3 Surcharges")

Discover doesn't specifically give mention to convenience fees, but they do cover surcharges. For Discover, the two terms are interchangeable.

You may assess a surcharge on a Card Sale conducted using a Credit Card provided that (i) the amount of the surcharge may not exceed the Merchant Fee payable by you to us for the Card Sale, and (ii) you assess surcharges on card sales conducted using other credit cards accepted by you. You may not assess a surcharge or other penalty fee of any kind on any other type of Card Transaction or for any Card Sale conducted using a Card other than a Credit Card.

Discover states that "you assess surcharges on card sales conducted using other credit cards accepted by you." With this Discover has effectively deferred to other card brands for rules governing surcharges. Therefore, to surcharge Discover you'll also have to surcharge the other card brands that you accept - which will bring you back to VISA's more strict guidelines that differentiate between convenience fees and surcharges.

American Express
(Source: "American Express Operating Procedures for US Merchants" section: "1.7 Prohibited Use of the Card" and "8.5 Apartment Rentals")

American Express has a bit of confusion regarding surcharge in their operating agreement.

AMEX doesn't specifically mention surcharges in the "Prohibited Use of the Card" section of their operating procedures but they make specific reference to this section from the "Apartment Rentals" section of the same guide stating that:

"The prohibition in subsection 1.7 "Accepting the Card – Prohibited Uses of the Card" against imposing restrictions, conditions, or disadvantages (e.g., fees, surcharges, "convenience" or "administrative" fees, penalties) when the Card is accepted will apply whether or not your Rental Establishments impose them on any Other Payment Products."

There actually is no reference in subsection 1.7 that mentions surcharging, but it's obviously implied. In light of this, it's apparent that American Express also generally rules against convenience fees. If you'd like to make sure, we suggest that you contact AMEX directly, reference your merchant identification and request their convenience fee policy for your business's situation.

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