Can I charge clients a convenience/service fee?

[HCSalon]

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.

[Pnkspikchik]

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. 

[VanKalkerFarms]

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.

[VanKalkerFarms]

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...

[katt]

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?? 

[VanKalkerFarms]

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

[RHatch]

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?

[Russell]

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. 

[CottonCarrie]

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.

[katieand]

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

[Hardcore_Games]

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 

[Michael_L]

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.

[lock]

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

[Chad]

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. 

[lock]

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.?

[Helen]

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.

[shawndell]

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

[Joe]

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!

[isabelle · Accepted solution]

[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:

1. For it to be listed separately on the customer’s receipt.
2. To identify it as a surcharge.
3. For it not to exceed the actual processing fee that the merchant is charged for the transaction in question.
4. 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.

[Timtam1963]

Things are changing in Canada effective as of October 6th except for the province of Quebec.

You will be able to charge customers the processing fee for credit cards. However in my investigation I did discover that VISA does not charge fees for the last 30 plus years, so I do not understand why Square charges us. I have already raised this question with Square. 

Please remember though these fees are a taxation claim. So you can record the fees and claim them on your tax return as a business expense. However in doing so if your going to charge the customer then you have no right to claim the expense.

It boils down to Customer Service and what assist your business best. 

[KatU]

I wish I could just stop accepting credit cards period, such a hassle