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.

[KatU]

Ok, but how EXACTLY is it done. I got the rules part, but don’t know how to set it up

[Ria]

Hi @KatU  - Welcome to The Seller Community, it's always nice to see a new face 😊

Great Question.

To create and edit service charges:

Go to Account & Settings from your online Square Dashboard. 

Click Business > Service charges > Create a service charge. 

Name your charge, choose a percentage-based or fixed price service charge, then enter the amount of the charge. 

Select the location where the charge applies and add any applicable taxes.

Click the toggle if you want to automatically apply this charge to Online orders, then select which fulfillment types you want the charges to apply to. 

Click Save.

Feel free to let me know if you run into any trouble setting up your Service Charge. 

As always, feel free to stop by The Community with question, concerns and even feature requests. We are more than happy to assist. ✨

[JPWilkinson]

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.

[Kassi_]

Hey there, @Timtam1963 - 

Thank you for bringing this to the Community! 

Surcharges will differ from service charges when it comes to this. A service charge is an extra fee added to a sale to cover any additional expenses outside the cost of the initial goods being sold, such as bagging fee or delivery fee. Service charges can be a single flat fee or based on a percentage of the total sale amount.

While a surcharge is a fee added to the bill when a buyer pays with a credit card to cover the cost of payment processing fees. This varies from a Convenience Fee, which covers the costs of accepting payment outside of a merchant’s usual channel (e.g. by phone instead of in-store), no matter what payment method is used.

Also with surcharges, Square actually doesn't have a compliant way to apply these for Canadian sellers. There are issues when it comes to the credit network rules we have to abide by for processing. 

Please let me know if you have any other questions. Thank you! 

[Michael_L]

I think the motive behind this post is that the rules in Canada have changed recently, so Square may need to consider adding an option for card surcharges as an automatic checkout feature.  (I hope!)

[Timtam1963]

Hi Michael,

I responded to Kassie about that question again. If they would consider adding the feature, however since the demand for their Canadian Market is probably not as strong as the US market they may not go any further with it. 

We have added an additional item with our APP to take this into consideration. 

Thanks Tim

[Timtam1963]

Hi Kassi,

Are you from the US or Canada? Although the Canadian market for Square may not be as large as it is in the US I think it would be a consideration worth thinking about. 

We run a delivery service where we pick up restaurant orders, groceries, alcohol etc and delivery to their door. We have a set delivery fee and some customers like to tip which is great. However we do have some situations where we have some collections that are not placed through us but directly with the restaurant. 

At these times we are delivering to non data based customers especially if they are tourists. In this circumstance we would like to be able to recoup the cost incurred to us for the credit card fee from the customer to which as I mentioned legal as of October 6th here in Canada. 

I am certain many of your Canadian Customers would appreciate Squares consideration for the percentage to be passed on to the customer. 

Appreciate your consideration. 

Thanks Tim

[wholesum]

Hi Kassi,

Do you have a timeline when Square will be enabling this option for Canadian users? Our fees are quite high and we may need to look at other options if Square does not have a project plan in place for allowing us to enable this feature.

Thanks,

Krista

[Kassi_]

Welcome to the Community, @wholesum - 

I don't have a timeline yet for this feature request for being able to add the service fee in Canada. 

I would recommend heading over to the Ideate Board to drop this in as a Feature Request for the Product Team. Once we get more information from them, we can come back & post an update to keep you in the loop. 

Thank you! 

[Kassi_]

Welcome to the Community, @Timtam1963 - 

It looks like a post from October 2017 was the post that a seller had marked "solved". The thread has evolved a little bit since then, so I can see your point. 

There are some more financial restrictions when it comes merchants being able to charge a convenience fee or surcharge to their customers using a credit card. It looks like the post from @JPWilkinson provided some more detail on the Canadian side of this feature request. 

I completely understand the frustration with the delay in getting this implemented for our Canadian sellers. As soon as more information, an announcement can be made. 

[Timtam1963]

I do not understand how this article can be assumed as solved. I can see no strides in Square taking the opportunity to resolve this ongoing problem for Canadian Users.

Thanks Tim

[Michael_L]

What is the "Issue" you refer to? 

On the more general topic - and speaking as a Canadian consumer - if a company charges me a fee to pay with a credit card it is annoying and I am likely to not return.  I'm a bit baffled about why they changed the law to permit this.