Why is there a convenience fee and why am I paying for this? (2024)

FAQs

Why is there a convenience fee and why am I paying for this? ›

Convenience fees are charged by businesses to cover the cost they pay to payment processing companies for when a customer pays by credit card. A convenience fee is different from a surcharge, which is a charge simply for just using a credit card.

Merchants may charge a convenience fee when you pay with a nonstandard payment option, such as a credit card, or use a certain payment channel, such as your phone. Merchants may charge a convenience fee to discourage the use of credit cards, which are often more expensive to accept than other payment methods.

A convenience fee is charged when a customer uses a form of payment that isn't customary for the business. For example, a business that typically accepts online payments may offer the option to pay by phone for a fee. Convenience fees are legal in all 50 states but must be clearly communicated at the point of sale.

Buy your tickets at the box office

Many venues have a good old-fashioned box office you can line up at to buy tickets when they go on sale. If you buy your tickets at the venue hosting a given show, you generally won't face fees -- or at least not the same exorbitant ones Ticketmaster is known for.

Factors that determine what percentage the merchant is charged include: type of merchant (department store, convenience store, gas station); type of payment technology used by the merchant; whether the purchase is online or in person; and the type of card.

Convenience fees are normally a flat fee or a small percentage of the total payment, but they can add up to a substantial sum if the payments are large or recurring. You may be able to avoid convenience fees by paying with cash or another form of payment.

Convenience fees are not the same as tips or surcharges. They're charged to businesses like restaurants when their customers use a credit card to pay for service or product, and the restaurant passes the cost of that fee on to the consumer. This is why it may appear on your bill.

A convenience fee is an extra charge levied by a merchant when you use a credit or debit card to pay instead of cash. This fee helps cover the cost that the merchant incurs to process card payments.

The answer is: yes, if your business operates in states where it is legal to do so. As of the time of publishing this, the practice of imposing additional fees on credit card transactions (i.e., credit card surcharges) is prohibited in only three U.S. locations: Connecticut, Massachusetts, and Puerto Rico.

Are debit cards charged a convenience fee? ›

A convenience fee is charged to buyers who choose electronic payment, like a credit or debit card, over a standard payment option, like cash, check, or ACH. ACH is the paperless funds transfer system maintained by the Federal Reserve or other entities that have networks to exchange electronic funds transfer items....

The argument that Ticketmaster is responsible for high prices is really about service charges. The practice in the U.S. for decades has been to break down the cost of admission into a “face value” sum and one or more fees added to face value.

Here are three scripts you may want to use to notify your customers about an upcoming convenience fee: In-person: “There will be a $3 flat fee for online payments and credit cards. Would you like to use cash or another form of payment?” Online: “By selecting 'credit,' you agree to pay a $3 convenience fee.”

You may also be able to avoid these fees if you find that the merchant isn't adhering to state and federal laws. For instance, if your merchant tries to impose a fee in states where they're illegal, or if they try to charge a fee amount higher than that allowed by state law, you have the right to dispute the fee.

In 1985, California passed a law (Civil Code section 1748.1) that prohibited merchants from adding a surcharge (an extra fee) when customers pay by credit card instead of cash.

Pros and Cons of Credit Card Surcharges

If processing costs are built in to your prices, it's possible that surcharging will allow you to lower prices across the board. This, in turn, could make your business more competitive, especially if most of your customers pay with cash, check, or debit cards.

Is Debit Card Surcharging Legal? For debit cards and prepaid cards, surcharging is prohibited—even when the card is run as a signature-based transaction without the PIN. This restriction was implemented by the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Frequently Asked Questions: Convenience Fee

This fee is non-refundable. It is applicable to all modes of payment.