Convenience fees can be a fixed dollar amount or a percentage of the transaction amount, usually 2% to 3%, and must be disclosed to the consumer in advance. Types of payments where the payee typically charges a convenience fee include mortgage payments, property tax payments, college tuition, and taxes.
What is a convenience fee and should you charge it?
- The cost of processing. The reason that many venues charge a convenience fee is that the bank and processor service both take a small percentage from each credit card payment ...
- An outdated policy. ...
- The hassle of charging convenience fees. ...
- Time to adapt. ...
How to calculate convenience fee?
- How to calculate a convenience fee: If you want to earn $100 from a credit card payment, work backward from that amount, which is y: x = (y + .3) / .971. x = (100 + .3) / .971. x = ~103.30. To receive $100.00 from this credit card payment, you need to add a convenience fee of $3.30. In certain cases, you’ll need to double check the total for ...
What is the purpose of a 'convenience fee'?
- A convenience fee is a fee charged by a business for payments made through an alternative channel,rather than by cash,check,or ACH.
- Typical cases where convenience fees are charged include payments for taxes and tuition.
- The fee is typically a fixed amount or a percentage of the sale.
Is a convenience fee illegal?
- That Credit Card 'Convenience Fee' May Be Illegal. When a small mom-and-pop shop slaps on a small "convenience fee" for an in-store purchase with a credit card, it is likely confusing the term for a surcharge. Under a 2012 ruling, merchants cannot impose a credit card surcharge of more than 4 percent of the transaction.
Convenience fees usually range between two and three percent of the purchase price. Both of these fees are meant to help a business make up for any processing fees it may have to pay when you make a payment. For this reason, fees should not exceed the processing fee amount.