Convenience Fees vs. Surcharging
A convenience fee is a charge applied by businesses to cover the costs associated with payment processing. This fee is legal as long as merchants offer alternative, non-card payment options.
A surcharge, on the other hand, is an additional fee imposed simply for using a credit card without providing other payment options. This practice is illegal in certain states.
At Paystand, we do not support surcharges. Instead, we enable merchants to manage convenience fees and even offer cash discounts, which are legal in all U.S. states.
Legal Considerations
Convenience fees are regulated under several key U.S. laws:
- The Truth in Lending Act (TILA) – Requires merchants to disclose all fees associated with credit card transactions, including convenience fees.
- The Fair Credit Billing Act (FCBA) – Prohibits merchants from imposing surcharges without prior notice and requires them to be reasonable.
- The Dodd-Frank Act – Amended the FCBA to place additional restrictions on credit card surcharges.
Because surcharging is restricted or prohibited in many states, Paystand provides a fully compliant solution by allowing merchants to use convenience fees instead.
How Paystand Supports Convenience Fees & Incentives
With Paystand’s Convenience Fees module, merchants can:
✔ Pass the processing fee to the payer, reducing the impact on their revenue and profit margins.
✔ Offer credit card payments while maintaining compliance with state and federal regulations.
✔ Use incentives to encourage payers to use lower-cost payment methods, such as ACH or bank-to-bank transfers.