Forum Moderators: buckworks
Is there any regulation from credit card companies that merchant's or vendors (who receive the payments from end users) can not charge fees like transaction fees or convenience fees on recurring scheduled payments?
Like if I schedule a weekly recurring payment of $10 for next 4 weeks then vendor can not charge $2 (convenience fee for online payment) for each transaction?
Do let me know if anyone knows any other resources about regulations around e payments and credit card regulations and rules.
Thanks,
Vijay
When you get a merchant account, it will tell you if you can charge a surcharge on the transactions. Most of the time, it will tell you no, but most merchants raise the costs some to cover the merchant account fees.
Some acquirers will allow charges for a bona fide convenience outside of the merchants customary payment channel. There are a few others as well, such as if the transactions are usually face to face but the transaction is done over the phone. Also, if the charge is applicable to all forms of payment is usually OK. Of course, this is usually the easiest especially for Internet merchants since most of the time they might only accept credit cards as the form of payment.
But these are governed by the merchant account agreement.
Thanks for the reply. Let me give you a example to demonstrate exactly which fees I am talking about.
Suppose I am a end user for MetroPCS phone company. MertoPCS has different types of payment options for me to pay my monthly bills like online using cc, check, store, drop box, Over Phone, IVR etc. MetroPCS says they will not charge any convenience fees for check, store and drop box transactions but they will charge convenience fee of $2 for credit card online, Over Phone and IVR bill payments.
My question is if I schedule a biweekly schedule payment for my bill then should MetroPCS should charge me $2 for each transaction (that means monthly 2 times) or they should charge me only once per billing cycle or something else?
Is there any regulation about fees charged for recurring payments which are not part of bill amount like convenience fees or transaction fees?
Thanks,
Vijay
Merchant account providers will have the merchant sign a contract and in there it might state these fees are not acceptable. Mastercard and Visa rules / regulations are always changing - rather they are always being re-interpreted for their protection. Since the companies went public, you can download MasterCard Rules [mastercard.com] and Visa Rules (Volume One [usa.visa.com] and Volume 2 [usa.visa.com]}. These will help in understanding the process of accepting these cards.
The thing that the card associations do prohibit though is requiring a minimum charge on a credit card transaction.
The thing that the card associations do prohibit though is requiring a minimum charge on a credit card transaction.
About half the b&m stores I go into have notices about minimum purchase values for cards.
Agreed, they do, but you do know this is specifically forbidden, right? (At least every merchant account contract I've seen.) Every time my wife sees one of them she lets them know about it too.
Like if I schedule a weekly recurring payment of $10 for next 4 weeks then vendor can not charge $2 (convenience fee for online payment) for each transaction?
It's all in how you word it whether it's "legal" or not.
For example:
$12/wk 4-week subscription paid weekly or,
save $8 with a single payment of $40 for a 4-week subscription
Then it's not a convenience fee, it becomes a discount for buying in bulk.
Agreed, they do, but you do know this is specifically forbidden, right? (At least every merchant account contract I've seen.) Every time my wife sees one of them she lets them know about it too.
For the UK, MasterCard Rules 9.12.3 forbid a minimum / maximum transaction amount.
How people get around this rule, such as restaurants, is they make the minimum order/bill per service $5. Then it's no longer a minimum amount regarding credit cards, it's a minimum order for your store whether it's cash, check, credit.
Similarly, in the US you can't charge more for using credit cards so people offer a discount for paying cash, silly I know, but it skirts the problem and gas stations all over the place use this method.
Merchants who get multiple complaints on any of the rules from the merchant account provider or card associations run the risk of losing their merchant account and being placed on the TMF / MATCH list.
