Comments on: Convenience Fees and Surcharge Rules http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/ Useful Insights and Information About Electronic Payments for U.S. Merchants Tue, 20 Jul 2010 22:24:11 +0000 hourly 1 http://wordpress.org/?v=abc By: sandra farah http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3604 sandra farah Thu, 25 Feb 2010 02:25:16 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3604 I am urgently seeking information on VISA’s convenience fee regulations. We have a university wanting permission to charge a percentage-based convenience fee. According to the documentation I can access of VISA’s regulations, only a flat rate fee is permitted. I do recall having received permission from VISA in the past for a merchant to charge a percentage-based convenience fee. MasterCard regulations do allow for a percentage-based convenience fee, and I am hoping VISA does as well. I am urgently seeking information on VISA’s convenience fee regulations. We have a university wanting permission to charge a percentage-based convenience fee. According to the documentation I can access of VISA’s regulations, only a flat rate fee is permitted. I do recall having received permission from VISA in the past for a merchant to charge a percentage-based convenience fee. MasterCard regulations do allow for a percentage-based convenience fee, and I am hoping VISA does as well.

]]> By: anandkgoel http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3543 anandkgoel Mon, 26 Oct 2009 14:48:14 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3543 As you may know, Visa/MC introduce new interchange categories and new schemes like allowing merchants to charge of convenience fees because they want to get new industries to adopt acceptance of credit/debit cards. As you suggest, there is a legitimate debate that could be had about the overall “value” delivered to consumers who are paying the convenience fee. However, keep in mind that many utilities and municipal governments have to recognize/record 100% of revenue and they collect from their customers. Either by law or budget constraints they cannot pay credit card processing fees and therefore, have to charge convenience fees to offset merchant services fees. As you may know, Visa/MC introduce new interchange categories and new schemes like allowing merchants to charge of convenience fees because they want to get new industries to adopt acceptance of credit/debit cards. As you suggest, there is a legitimate debate that could be had about the overall “value” delivered to consumers who are paying the convenience fee.

However, keep in mind that many utilities and municipal governments have to recognize/record 100% of revenue and they collect from their customers. Either by law or budget constraints they cannot pay credit card processing fees and therefore, have to charge convenience fees to offset merchant services fees.

]]> By: anandkgoel http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3542 anandkgoel Wed, 21 Oct 2009 18:00:32 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3542 Donovan, the scenario you suggest works for tax payments where two transactions can be run - the first transaction is for the tax amount and goes into the taxing authority's account the secondary transaction is run for the convenience fee and can be deposited into the third party's account. For any non-tax payment, a single transaction must be run that combines both the original amount and the convenience fee. There are ways to manage this process so that the principal amount is deposited into the City's account the secondary amount is deposited into the third party's account. Let me know if you would like any additional insight. Donovan, the scenario you suggest works for tax payments where two transactions can be run – the first transaction is for the tax amount and goes into the taxing authority’s account the secondary transaction is run for the convenience fee and can be deposited into the third party’s account.

For any non-tax payment, a single transaction must be run that combines both the original amount and the convenience fee. There are ways to manage this process so that the principal amount is deposited into the City’s account the secondary amount is deposited into the third party’s account. Let me know if you would like any additional insight.

]]> By: Donovan http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3540 Donovan Mon, 19 Oct 2009 17:06:07 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3540 If a municipal government uses a third party service provider for online payments including Visa transactions, can the third party provider seperate out the convenience fee from the principal and deposit only the principal into the cities bank account? If a municipal government uses a third party service provider for online payments including Visa transactions, can the third party provider seperate out the convenience fee from the principal and deposit only the principal into the cities bank account?

]]> By: John Schooley http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3539 John Schooley Wed, 30 Sep 2009 21:38:31 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3539 So who goes punished when say utility companies (municipal gov't run) allow for convenience fee %0 or in fact take a convneience fee front counter face to face? Or how about the many, many utility companies that take on long e-check say $1.95 and the convenince fee is say eith 3.25% or $3.95 Seems to me the regulators, authorities, merchant service banks are looking the other way and so is VISA So who goes punished when say utility companies (municipal gov’t run) allow for convenience fee %0 or in fact take a convneience fee front counter face to face? Or how about the many, many utility companies that take on long e-check say $1.95 and the convenince fee is say eith 3.25% or $3.95
Seems to me the regulators, authorities, merchant service banks are looking the other way and so is VISA

]]> By: mike http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3538 mike Wed, 19 Aug 2009 04:17:25 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3538 Thank you for the question Mukesh! Visa does allow a “service fee” to be charged on face-to-face tax payments (only MCC 9311 - Tax Payments) as a percentage of the transaction. The Visa Tax Payment requires registration and the Service Fee must be a separate transaction. A key component of the program is that the convenience fee be automatically calculated prior to authorization and then submitted and processed as a separate transaction from the fees or taxes being paid. Any Town, City or County that wants to assess a fee back on credit card transactions, regardless of whether it is online, over the phone, in the mail or in person must meet these requirements and must be registered with Visa. Moreover, Visa requires a special convenience fee rate on their consumer debit cards for Tax Payments not to exceed $3.95. Percentage based fees on Visa consumer debit cards or fixed rate fees greater than $3.95 are prohibited. Government entities can utilize BIN (Bank Identification Number) file management so that Visa consumer debit cards are automatically identified on tax transactions and the $3.95 fee is automatically substituted prior to authorization. Read our other post to learn more about <a href="http://www.optimizedpmts.com/blog/index.php/how-accepting-atm-cards-can-improve-your-profitability/" rel="nofollow">BIN file management</a>... Thank you for the question Mukesh! Visa does allow a “service fee” to be charged on face-to-face tax payments (only MCC 9311 – Tax Payments) as a percentage of the transaction. The Visa Tax Payment requires registration and the Service Fee must be a separate transaction.

A key component of the program is that the convenience fee be automatically calculated prior to authorization and then submitted and processed as a separate transaction from the fees or taxes being paid. Any Town, City or County that wants to assess a fee back on credit card transactions, regardless of whether it is online, over the phone, in the mail or in person must meet these requirements and must be registered with Visa.

Moreover, Visa requires a special convenience fee rate on their consumer debit cards for Tax Payments not to exceed $3.95. Percentage based fees on Visa consumer debit cards or fixed rate fees greater than $3.95 are prohibited. Government entities can utilize BIN (Bank Identification Number) file management so that Visa consumer debit cards are automatically identified on tax transactions and the $3.95 fee is automatically substituted prior to authorization. Read our other post to learn more about BIN file management…

]]> By: Mukesh Patel http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3537 Mukesh Patel Tue, 18 Aug 2009 20:21:59 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3537 Has Visa changed it's policy now to allow for a convenience fee on a face to face government transaction? Has Visa changed it’s policy now to allow for a convenience fee on a face to face government transaction?

]]> By: mike http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3473 mike Fri, 21 Nov 2008 07:09:25 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3473 Thanks for the update Gene. Starting November 2007, MasterCard decided to allow governments to charge a convenience fee to customers who pay by credit card in face-to-face transactions and American Express adopted a similar policy in January 2008. MasterCard's rules around this change can be found <b><a href="http://www.optimizedpmts.com/regulations/mc_convenience_fee_govt.pdf" rel="nofollow">here</a></b>. Since Visa and Discover still have not followed suit with this change and since MasterCard and American Express will not allow a convenience fee to be assessed on their brands and not on Visa and Discover Cards, the practical implication is that government entities that want to charge a convenience in face to face transaction must only accept MasterCard and/or American Express. In other words, if a government accepts Visa cards, then it cannot charge a convenience fee on any credit card in face-to-face transactions. Thanks for the update Gene. Starting November 2007, MasterCard decided to allow governments to charge a convenience fee to customers who pay by credit card in face-to-face transactions and American Express adopted a similar policy in January 2008. MasterCard’s rules around this change can be found here.

Since Visa and Discover still have not followed suit with this change and since MasterCard and American Express will not allow a convenience fee to be assessed on their brands and not on Visa and Discover Cards, the practical implication is that government entities that want to charge a convenience in face to face transaction must only accept MasterCard and/or American Express. In other words, if a government accepts Visa cards, then it cannot charge a convenience fee on any credit card in face-to-face transactions.

]]> By: Gene http://www.optimizedpmts.com/blog/index.php/convenience-fees-and-surcharge-rules/comment-page-1/#comment-3468 Gene Fri, 31 Oct 2008 03:55:16 +0000 http://www.optimizedpmts.com/blog/?p=13#comment-3468 A convenience feee can be charged in a face to face situation for government entities and secondary education. A convenience feee can be charged in a face to face situation for government entities and secondary education.

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