To Fee or Not to Fee
If you have ever been to a church where the preacher exclaims from the pulpit “Somebody’s gonna be mad at me tonight!” or similar for telling the truth, you will understand it when I say “Somebody’s gonna be mad at me tonight”. And you know what, luxeling? That’s fine by me, because I’m going to how it is!
I rarely carry cash on me. Captain America and my mother are constantly on my case about it– but I enjoy using my cards. For example, with one of my cards, I earn points or cash back. That is fabulous, it’s like the gift that keeps on giving. With others, I am extended benefits such as consumer protection, extended warranties, etc. So when I have clients that want to pay our company or another vendor by credit card, I understand and encourage them. In addition to the convenience, it also enters a third party into your service, so that if there is ever a problem, you can rely on their various resources to assist you. You too may have a card that allows you to earn points or cash back that allows you to save for something for your new home after you are married or even your honeymoon.
So, as you can imagine, when I review contracts or research vendors, it irritates the lipstick out of me to see them charging clients fees to take their credit cards. In addition to being bad business, it is also illegal in some states and goes against virtually every merchant agreement that credit card companies have in place.
Why on earth would you charge a client to pay you? (Here it comes….Somebody’s gonna be mad at me tonight!)
Credit card payments are secure, reliable and give the vendor quick access to their money. Extra fees tacked on to the retail price of your service or product is to cover the merchant fee that the vendor is being charged for accepting credit cards. Charging clients a fee, whether a percentage of the payment or what you consider a “nominal” fee, is ridiculous. It’s the price of doing business– just like business licenses, pencils, internet service, etc. Vendors have two legitimate choices: 1.)”Roll” the fees into the overall cost of their service to offset such a fee, or 2.) Claim the fee at the end of the year on your taxes. The third option of nickel and diming your clients for your responsibilities as a business owner is just bad business. Some vendors may rely on their own personal experiences where they have gone to gas stations or fast food establishments where they were charged a fee for using their card. When I hear this, I typically ask, “Were you happy with it?” and “Why did they do that?” Typically, the answers I hear are “No” and “I don’t know”. So in addition to copying something that they have no idea why it is being done, some vendors are looking to also irritate and inconvenience their own customers in a similar way they were irritated and inconvenienced.
“Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card.”
From MasterCard (page 124 of the MasterCard Rules agreement section 5.9 Prohibited Practices)
“A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing.”
So let’s lay it on the line right now:
- You cannot be charged a “surcharge”, no matter what it is called (convenience fee, service fee, etc.), regardless of who your vendor uses to process their credit cards, if you are paying by Visa or MasterCard. This also applies to debit cards bearing a major credit card company’s logo. It violates their merchant agreement and could put their ability to take credit cards in jeopardy.
- You can be offered a cash discount for paying in cash as opposed to credit card. For example, if you make a payment in cash, a vendor is entitled to offer you a discount, but that same discount does not have to be extended if you are paying by credit card.
I have known some clients who obtain a line of credit strictly for their wedding. Subsequently, this is a major source of inconvenience when they are surcharged or forced to go through other methods to remit payment. So for those vendors wishing to continue the practice of overcharging their clients– you do so at your own peril. More cardholders are beginning to report such instances (whether they pay the fee or not) or refuse to do business with the vendor out of sheer principle.