With credit card payments being a necessity in the increasingly digital marketplace, finding ways to reduce processing fees is a top priority for most merchants.
Other than adding a surcharging fee, merchants may use another method to recover some of the processing credit card fees by introducing a convenience fee. While surcharging fee is calculated based on the percentage of the customer’s transaction, convenience is usually a fixed rate.
Same as surcharges, the rules for convenient fees vary depending on the credit card network. For example, Visa allows merchants to charge convenience fees for non-standard payments. It means that merchants can charge a fee to accept payment methods that generally differ from what they usually accept, for example, when paying online other than in-store or in person. Other credit card schemes only allow select businesses and government agencies to add a convenience fee.
Merchants can impose a minimum purchase amount to accept credit card payments so long as it doesn’t surpass $10; however, they can’t place a maximum purchase amount for credit card transactions.
Some merchants will offer discounts for their customers if they pay with cash or debit. Cash discounts are legal everywhere in the United States, while convenient fees and surcharges are not legal in all states.
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Is credit card surcharging legal?
Until 2013 when a class-action suit was filed by merchants complaining about major card companies charging outrageous fees, credit card surcharging wasn’t allowed in the United States.
