thread Re: Can I charge clients a convenience/service fee? in Online Store

Can I charge clients a convenience/service fee?

HCSalon — Fri, 09 Oct 2020 17:24:50 GMT

In CANADA, can a Merchant allowed to apply a "Service / Convenience Fee" to client's transaction for choosing specific payment method i.e.Credit Card?

Under the Code of Conduct for the Credit and Debit Card Industry in Canada, merchants may choose to offer DISCOUNTS for different payment methods (i.e. cash, cheque).

Instead of offering a discount for cash, I'd like to know if we are allowed to charge the client a service fee for Credit Card payment.

Can I charge clients a convenience fee?

Pnkspikchik — Thu, 29 Sep 2016 16:15:11 GMT

Is there a way I can set up a convenience fee for the total percentage of the total of every sale without doing it manually?

I would like to use this option when customers pay online.

Thank you.

Re: Can I charge clients a convenience fee?

VanKalkerFarms — Thu, 29 Sep 2016 16:25:12 GMT

You can but legality of that varies state to state. Many states do not let you pass on the Credit card fees to the consumer.

let me see if I can find the links from a previous post.

Re: Can I charge clients a convenience fee?

VanKalkerFarms — Thu, 29 Sep 2016 16:34:44 GMT

here are 2 articles about surcharging the customer.

https://squareup.com/help/us/en/article/5671-can-i-apply-a-surcharge-to-square-sales

https://www.cardfellow.com/checkout-fees-charging-credit-card-fees-to-customers/

here is a thread from this forum with some discussions about the subject.

https://www.sellercommunity.com/t5/Questions-How-To/How-do-I-add-a-surcharge-to-my-customers-bill/td-p/2404

Re: Can I charge clients a convenience fee?

RHatch — Mon, 23 Oct 2017 18:19:28 GMT

You would have to check with your local laws on this, Even in the States, this varies from State to State.

If you do this you would have to up the price of every item or manually calculate it for each sale and enter it into a variable service charge item. It would be easier to up the price and give a discount to anyone paying cash. Makes cash payers feel good and doesn't upset card paying customers.

However, what is the cost of handling cash and checks versus accepting a credit card? How many hours do you spend each week, counting, handling, depositing, and loss?

Re: Can I charge clients a convenience fee?

Russell — Tue, 24 Oct 2017 17:45:21 GMT

Thanks @RHatch for the tips here. 😎

@HCSalon - the payment card network rules prohibit adding a surcharge for the acceptance of payment cards in Canada. It won't be possible to pass the processing fee directly to your customers for credit card transactions.

I hope this helps to clear things up, please let me know if you have any other questions.

Re: Can I charge clients a convenience fee?

CottonCarrie — Sat, 23 Jun 2018 02:53:10 GMT

Has this changed since 2017? My husband was just charged the processing fee on a purchase:

Cost of Item + Processing fee + Tax. I found this very unusual.

Also this vendor put the processing fee at 3.78% as they said that's what 2.65% turns out to be when your funds are deposited...! I checked my bank account and did the math, I'm not charged anything else by Square...I have always had banking fees...perhaps they are adding those in too.

Re: Can I charge clients a convenience fee?

katieand — Mon, 25 Jun 2018 20:21:00 GMT

No changes to this as far as I'm aware @CottonCarrie!

Here's more info about Square's fees in Canada here: https://squareup.com/help/ca/en/article/5068

Re: Can I charge clients a convenience fee?

lock — Fri, 26 Oct 2018 15:54:36 GMT

Can you send a link to the payment card network rules?

Re: Can I charge clients a convenience fee?

Chad — Sat, 27 Oct 2018 01:33:49 GMT

Hey @lock!

You can find the MasterCard's in this link. It's under the Problems shopping tab.

For American Express you can charge a convenience fee if you're business is classified as government, utilities, or education sectors. You can find this information in the American Express Merchant Operating Guide for Canada.

You have to contact Visa directly to get a copy of their rules if I remember correctly.

Re: Can I charge clients a convenience fee?

lock — Sun, 28 Oct 2018 04:03:19 GMT

Hey @Chad in the original question by @HCSalon they posted "Under the Code of Conduct for the Credit and Debit Card Industry in Canada, merchants may choose to offer DISCOUNTS for different payment methods (i.e. cash, cheque)." (Link to that is here)

Does this mean that i can add an administrative fee or something on all off my invoices and than give a discount on Cash or Cheque payments etc.?

Re: Can I charge clients a convenience fee?

Helen — Sun, 28 Oct 2018 21:41:33 GMT

Hello @lock, Helen here stepping in for Chad.

As mentioned in the Best Answer to this thread, it's prohibited to apply a surcharge to customers paying with credit cards in Canada. You can offer discounts to customers paying with cash or by cheque, but you cannot add a fee to cover card payment acceptance.

Re: Can I charge clients a convenience fee?

Hardcore_Games — Mon, 29 Oct 2018 16:24:05 GMT

Adding fees is against the Visa, Mastercard and other card merchant agreements. I read the fine print so I am aware of the policies.

The merchant that charges fees could have his merchant account suspended

Can I charge clients a convenience fee?

katt — Tue, 04 Dec 2018 23:43:52 GMT

This reply was created from merging an existing thread: Can I charge clients a convenience fee?

Is there a way to have the customers cover the fees for using a card instead of cash? Like in the tax line or a convenience fee??

Re: Can I charge clients a convenience fee?

VanKalkerFarms — Tue, 04 Dec 2018 23:43:37 GMT

First thing is it is illegal in many states to pass on an additional fee specifically to cover credit card fees. you'll need to research your state and county to see if you can. On a personal note, just build the credit card fee into your prices just like you build your property taxes, labor wages, utilities, workers compensation, Rent, cost of goods, profit margin, etc into your price now. It just looks like you are pinching pennies from your customer and may turn them off from buying.

there are workarounds on this forum, but not a way exactly built into Square to do it. check out this search for a few threads with info. https://www.sellercommunity.com/t5/forums/searchpage/tab/message?q=customer%20fee

Re: Can I charge clients a convenience fee?

shawndell — Sun, 07 Jun 2020 21:46:09 GMT

Has this option been implemented within Square now? I know Clover has that feature built in.

Re: Can I charge clients a convenience fee?

Joe — Mon, 08 Jun 2020 11:29:26 GMT

Hi there, @shawndell - thanks for reaching out.

Adding a surchare is possible, but there are certain regulations based on state. We would recommend taking a look at this helpful resource for further details.

Let us know if you have any clarifying questions!

Re: Can I charge clients a convenience fee?

Michael_L — Wed, 10 Jun 2020 19:19:26 GMT

That's called 'getting scammed'.

OK, maybe not everyone agrees, but you'll note that larger and more established shops do not charge a fee like that. It's annoying to customers, if nothing else.

Here's some more official information:

https://www.canada.ca/en/financial-consumer-agency/services/merchants/credit-fees-merchant.html

It's good to remember that you will see your sales increase by far more than 3 or 4% when you start taking card payments. The small fee is easily recouped by the increased revenue.

Re: Can I charge clients a convenience/service fee?

isabelle — Fri, 09 Oct 2020 17:23:54 GMT

[UPDATED: OCTOBER 9TH, 2020]

Please consider touching base with a tax and/or legal professional for further guidance on whether surcharges are permitted in your area.

Should you decide to apply a surcharge, it is your responsibility to meet all legal and card network requirements. If you intend to enact a surcharge policy, you must first notify Visa, MasterCard, and Discover.

To apply a surcharge you generally need at least:

For it to be listed separately on the customer’s receipt.
To identify it as a surcharge.
For it not to exceed the actual processing fee that the merchant is charged for the transaction in question.
Disclose the surcharge, service fee or convenience fee to the customer, and provide the customer the option to cancel the transaction at no cost, in each case prior to completion of the transaction.

Re: Can I charge clients a convenience/service fee?

JPWilkinson — Fri, 09 Oct 2020 22:24:22 GMT

Per the Government of Canada:

Charging a service fee or a “convenience fee”

(Italics and Bold are my changes) From the notice above, According to Visa, MasterCard and American Express merchant rules, merchants generally cannot charge you a service fee when consumers use their credit card. However, Visa, MasterCard and American Express permit eligible merchants to charge a service fee (also known as a convenience fee) for certain types of transactions.

Visa, MasterCard and American Express all require that the fee be clearly disclosed to cardholders before the transaction is completed and that cardholders are able to cancel the transaction without penalty.

The credit card companies put that clause in their merchant policies - there is no Canadian law that says you can't.

So, if you do charge a fee to use a credit card, choose your wording carefully on what the charge is called - and if people still don't want to pay it, they have the right to cancel the transaction and go elsewhere. Not the best option, but people generally are used to seeing more of these service charges, etc - as businesses try to recoup costs.

In my opinion, then, you should be ok - as long as the fee is clearly identified on its own line and that the buyer can stop or not proceed with the transaction.