Convenience and service fees

Debit optimization enables customers to do two things they are always interested in; saving money and decreasing the risk of fraudulent transactions.

What are convenience fees?

If you accept payments over the phone, through the mail, or online, you know there are additional costs to support that payment as compared to a traditional card-present transaction. Expanded payment options may be great for customers, but it may not always be great for your bottom line. Whether it is operational costs, or just the higher cost of card-not-present acceptance, alternative payment options can be costly. Offset those payment processing costs through a convenience fee where the customer helps to cover the cost of the payment option they want to use.

Processing a debit card through card brands means using the “credit rail,” while using the debit networks is called the “debit rail.” The debit rail requires the entry of a unique, secure personal identification number (PIN) known only to the cardholder. The PIN validates that the cardholder is most likely the authorized user of that debit card, which can stop fraudulent use before the transaction is authorized. In recent years, EMV technology has helped significantly reduce cases of card fraud, however, EMV can only stop counterfeit cards, not fraudulent card users - PIN changes that. This additional layer of validation helps your business protect itself against fraudulent use and fraud related chargebacks.

What are service fees?

Costs are a big part of managing any budget, and when working through budgets defined by grants, government funding, or other non-profit bodies, controlling costs can make a difference. Service fees are a way for certain identified types of merchants to control costs associated with accepting card payments.

Service fees can be leveraged on all payment processing transactions, not just credit cards. Plus, service fees can be implemented in card-present and card-not-present environments, not just one or the other. Service fees are charged as a separate transaction apart from the original charge. Service fees can be a flat fee or a percentage of the transaction — depending on the payment method. Unlike our other programs, there are also no set caps or rules around the service fee amount. The fee however must be reasonable as compared to the costs for processing the transaction. That gives you flexibility to leverage a fee that matches your organization’s cost model.

Payment processing fee details

Convenience fees

  • Only applicable to transactions that are completed in a card-not-present environment – although not limited exclusively to card-not-present environments – and are not allowed for card-present or face-to-face transactions
  • A convenience fee is valid on all forms of payment accepted through a non-face-to-face payment channel
  • Should be a flat amount, regardless of the value of payment due
  • The fee must be collected at time of payment – not at a later time or in a separate transaction
  • Merchant must clearly disclose to the cardholder that a convenience fee is being charged, before the completion of the transaction, the cardholder must be given the opportunity to cancel the transaction

Service fees

  • Visa® is the only card brand that requires a registration, which may take up to 45 days to complete
  • If a service fee is charged by a government taxing authority or a third party, the merchant must be authorized to process tax payment transactions
  • While no signage is required, the service fee must be clearly shown to the cardholder prior to payment and the cardholder must be provided the option to cancel the transaction