The actual guidelines for Visa are listed in section 5
Both MasterCard and Visa card have strict policies surrounding convenience fees. Visa’s are more restrictive than MasterCard’s. The following includes a summary of the combined Visa and MasterCard rules followed by the actual regulations.
General Guidelines For Convenience Fee Assessment
- A convenience fee cannot be assessed in a face-to-face merchant environment.
- A convenience fee cannot be assessed for recurring payments. The convenience fee was designed for one-time payments not for payments in which a cardholder allows his credit card to be periodically charged for recurring goods or services. Examples of recurring charges include, but are not limited to, insurance premiums, subscriptions, Internet service provider monthly fees, membership fees, tuition or utility charges.
- The merchant must provide a true "convenience" in the form of an alternative payment channel outside the merchant's customary face-to-face payment channels, and the fee must be disclosed by the merchant to the cardholder as a charge for the alternative payment channel convenience that is provided.
- The convenience fee must be disclosed prior to the completion of the transaction. The cardholder must be given the option to cancel the transaction if not wanting to pay the fee.
- The convenience fee must be included in the total amount of the transaction; it cannot be "split" out from the transaction amount. The exception would be for card acceptance programs involving MasterCard only where Visa is not accepted.
- If a convenience fee is assessed it must be for all payments (V, MC, Discover, AMEX, ACH, Check) within a particular payment channel (mail, phone, internet).
- A Visa convenience fee must be a flat fee, it cannot be tiered or percentage based regardless of the value of the payment due.
- A Visa convenience fee must not be authorized and settled separately from the primary transaction.
- A Visa convenience fee must be assessed by the same merchant actually providing the goods and services. A convenience fee may not be assessed by a different merchant.
- A MasterCard convenience fee can be tiered, percentage based, or flat.
- A MasterCard convenience fee can be authorized and settled separately from the primary transaction.
- Since all convenience fees are required to be assessed equally a merchant who accepts Visa and MasterCard is restricted to a flat convenience fee and must combine all charges into one authorization and clearing transaction.
- Many states have passed legislation that requires convenience fee assessment on all credit card transactions. Unfortunately state legislation does not supercede Card Association Rules or Policies.
- A convenience fee can not be referred to as a surcharge and can not be advertised as an offset to processing fees.
- The Card Associations will not grant waivers to these policies regardless of the merchant relationship.
For The Published Rules From Visa And MasterCard Please See Below:
Visa U.S.A Inc. Operating Regulations Volume I-General Rules May 15, 2008
5.2.E Convenience Fees
A Merchant that charges a Convenience Fee must ensure that the fee is:
- Charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant's customary payment channels
- Disclosed to the Cardholder as a charge for the alternative payment channel convenience
- Added only to a non face-to-face Transaction (1-see footnote below)
- A flat or fixed amount, regardless of the value of the payment due
- Applicable to all forms of payment accepted in the alternative payment channel
- Disclosed prior to the completion of the Transaction and the Cardholder is given the opportunity to cancel
- Included as a part of the total amount of the Transaction
- A Convenience Fee must not be added to a recurring transaction.
A Convenience Fee may only be charged by the Merchant that actually provides goods or services to the Cardholder. A Convenience Fee may not be charged by any third-party.
(1) The requirement for an alternate payment channel means that Mail/Telephone Order and Electronic Commerce Merchants whose payment channels are exclusively non face-to-face may not impose a Convenience Fee.
(c) 2008 MasterCard International Incorporated
MasterCard Rules, February 2008 (Revised May 28, 2008)
Merchants and Sales Transactions
5.9.2 Charges to Cardholders
A merchant must not directly or indirectly require any MasterCard cardholder to pay a surcharge or any part of any merchant discount or any contemporaneous finance charge in connection with a MasterCard card 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.
- A surcharge is any fee charged in connection with a MasterCard transaction that is not charged if another payment method is used.
- The merchant discount fee is the fee the merchant pays to its acquirer to acquire transactions.
The MasterCard options:
- No registration is required to implement Service / Convenience Fees
- MasterCard's rules allow for the separation of the Service Fee transaction from the payment amount due.
- A MasterCard convenience / service fee can be tiered, percentage based or flat.
In summary:
- Applying percentage based and/or separation of the service/convenience fee in other segments could only be done if the merchant accepted MasterCard and not Visa.
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