Credit Card Convenience Fees — Your Questions Answered

Credit Card Convenience Fees — Your Questions Answered

There are more than 500 million active credit card accounts in the United States, as Americans continually make more and more purchases with their credit card. As a merchant, accepting credit card payments could increase revenues. The more payment methods you offer customers, the more likely you are to increase a sale and the less likely you are to turn someone away at the register. If you currently accept credit card payments — or are considering doing so — you may have heard the term "credit card convenience fee." You may also have heard the term "credit card surcharge." People often use these terms interchangeably, even though they are different. In this article, we offer a complete guide to credit card convenience fees for small business owners. We outline what convenience fees are and how they work. We also cover why they are different from surcharges and the best ways to use these fees to your advantage.

What Are Convenience Fees?

A convenience fee is a fee levied by retailers to customers when they pay via a non-standard payment channel. One example of this would be a movie theater charging convenience fees when a customer purchases tickets via online payment instead of at the box office. Or, as another example, let's say that you own a brick-and-mortar store. A customer calls and would like to place an order over the phone, even though this is not something you normally do. You could charge a fee for the inconvenience of having to manually enter the card information, since you typically process transactions in person.Convenience fees can be applied whether the customer pays with a credit card or debit card.

How Do Convenience Fees Work?

Merchants can charge credit card convenience fees if they accept payment via a non-standard channel. However, credit card companies have criteria that must be met if you want to charge a convenience fee. Below is a breakdown of how each card brand treats these fees.


Visa requires merchants to meet certain criteria to charge convenience fees:

  • The payment must take place across an alternative payment channel.
  • The fee must be disclosed to the customer, and the option to use an alternative payment method must be available.
  • Merchants must charge a flat-rate fee rather than a percentage of the sale.


Mastercard does not have as stringent restrictions when it comes to convenience fees. Convenience fees can be charged to a customer as long as the fee is imposed on all like transactions no matter the form of payment used. For example, all online purchases would need to be subject to a convenience fee, not just those that are made with Mastercard brand credit cards.


Discover does not have an official convenience fee policy. However, it requires all cards to be treated the same, which means it's reasonable to assume the rules that apply to other credit card networks would also apply to Discover. A merchant can’t charge a fee to a Discover cardholder that it can’t charge a cardholder of a Visa, Mastercard, or American Express.

Can You Charge Your Customers Convenience Fees?

convenience fee: person handing over a credit card to a woman

If the above criteria are met, you can charge convenience fees. However, doing so may spark customer complaints.One of the biggest issues with convenience fees arises when they are charged to customers paying online, like in the movie theater example cited above. The theater contends that the customer can call or visit the box office in person to purchase the tickets. But, if they call to make their purchase, they may face a long wait time on the telephone. They must also have access to a phone to do so, which can cost them in terms of data or minutes. If they wait until the day of the movie to visit the box office, they risk the movie being sold out. So, while businesses can charge convenience fees, it may not be in their best interest to do so. Accepting credit card transactions in-person, online, or over the phone increases the likelihood of completing a sale and should not be seen as a deterrent or inconvenience, especially with how easy it is to implement a new payment processing system (more on that in a bit).

Are Convenience Fees Different From Surcharges?

Though somewhat similar, convenience fees and surcharges are ultimately different. Surcharges only apply when a customer pays with a credit card. This is different from convenience fees, which apply when customers use any form of electronic payment in a non-standard setting. Businesses charge surcharge fees because of high credit card processing rates. Payment processors charge a service fee for processing the transaction. This fee is around 3.5%. Merchants are often saddled with paying this fee, which comes off their bottom line. Essentially, businesses are punished for the customer using a credit card, making more money on cash transactions than they do on credit card transactions. Surcharges pass these processing fees to the consumer directly. Businesses display signage with disclaimers indicating that a customer will be charged an additional fee should they use a credit card. If they use an alternative payment method, like cash or a debit card, they are not charged the additional fee. Surcharge fees are legal in 47 states. These are the states and U.S. territories that don’t allow surcharge programs:

  • Colorado
  • Connecticut
  • Massachusetts
  • Puerto Rico

Surcharge fees have actually become more commonplace in recent years, with states like California, Texas, Oklahoma, and New York ruling that surcharge programs are in fact legal so long as:

  • The businesses follow rules from the credit card issuers.
  • The businesses display the cash price next to the credit card price.
  • Customers are not charged a processing fee for debit cards.

Can You Use Convenience Fees to Your Advantage?

If the card network allows it, you can potentially charge convenience fees to customers. However, it may not be in your best interest to do so. It can leave customers feeling frustrated, especially when paying via an alternative channel is more challenging. Since convenience fees are often flat fees, customers may question what it is they're paying for. However, surcharge programs are completely legal and much more transparent. With a surcharge program, you clearly convey to customers why you are passing processing fees along to them simply because they are using a credit card. If they choose an alternative payment method, they will not have to pay these fees. Customers also have an option to pay in whatever way is most convenient — whether that’s online, over the phone, or in person — without incurring an extra fee. Choosing your payment processor wisely can help cut down on fees for your business. For instance, Nadapayments is a payment processor solution that helps make things easier for businesses. With Nadapayments, the surcharge program is built right in, so you can start saving money and reducing your processing fees to zero.Plus, you only pay a flat fee of $35 per month. This monthly fee gets you a Wi-Fi-enabled EMV Quick Chip machine for in-person transactions, a virtual terminal for online or over-the-phone transactions, and a mobile app for on-the-go transactions. It also gives you the signage needed to implement a surcharge program.

Are Credit Card Convenience Fees Right For Your Business?

woman smiling while holding her credit card in front of her laptop

Credit card convenience fees are fees levied against a consumer for paying via a non-standard channel. Merchants must meet rules set by credit card issuers when charging convenience fees. Convenience fees are different from surcharge fees, which exist simply to pass the cost of credit card processing to the consumer so that a business' bottom line is not impacted. If you're looking to learn more about how surcharge fees can help improve your business' bottom line, be sure to get started with Nadapayments today.

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Aleksey Nugid
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