Using a Convenience Fee to Offset Credit Card Fees
Credit card processing fees can really add up over the course of the months and year. Instant Accept provides a method for merchants to pass some of those fees along to their customers. This method is known as charging convenience fees.
Getting reward points or cashback is a huge incentive for consumers to use their credit cards for purchases that they could otherwise pay cash for. According to the U.S. Consumer Financial Protection Bureau’s 2018 Consumer Credit Card Market Report, credit card spending using rewards cards has continued to grow in the last few years. The growth has been across all categories of consumers. At the time of this report, consumers tapped into rewards cards for more than 80 percent of their credit card purchases. Somebody has to pay for those rewards as the costs of these perks are passed along to the merchants accepting the credit card payments.
A merchant can consider charging convenience fees or a surcharge. A convenience fee is different than a surcharge, one significant difference is that a surcharge can be applied on credit cards but not on debit cards. Instant Accept will be able to support surcharging within the next few weeks. However, at this time, we will look at convenience fees and how a merchant might apply them.
When can Convenience be Applied
A Convenience Fee can only be charged when the purchaser is using an alternative (non-standard) payment method. Let me share an example. would be that the merchant normally takes payments in person, but a convenience fee could be charged if they are receiving the payment via the phone or online.
Credit card companies have rules regarding the ability to charge convenience fees. I will touch on a couple of them here. Check directly with your processor to make sure all the guidelines are followed.
A few of Visa’s rules include:
- Convenience fee can only be charged online
- Convenience fee must be disclosed from the beginning and an alternative payment method must be available
- Cannot be charged on recurring transactions
Mastercard, American Express, and Discover all have their own set of rules as well. Please consult with your credit card provider to get a complete set of guidelines. Here is an excellent blog on Merchant Maverik by Hsin-Wei Luang.
Convenience Fee in Instant Accept & QuickBooks (The Big Promise)
In setting up your QuickBooks® convenience fees that comes in through Instant Accept, first set it up in QuickBooks®. This can be done by the following steps.
- creating an income account called Convenience Fee
- Create a product called Convenience Fee that links to that income account
Be sure to provide a message offering an alternative payment method such as ACH. Check with your accountant in regard to how they would like to see convenience fees setup for your business.
In Instant Accept, we have a tab under our Hierarchy category which makes it easy to set up a convenience fee that is fairly simple.
As you can see in the screenshot above, a convenience fee can be set up as a percentage, flat fee, or a combination of the two. A threshold amount of when to start charging the fee can also be setup.
Convenience Fees in Action
To see a short demonstration on how the convenience fees works within Instant Accept and our real-time synchronization into QuickBooks® please see our convenience fee demo video. For more information on Instant Accept and to learn more about our feature-rich integration with QuickBooks® please Contact Us or call (855) 220-2840.