What is a convenience fee? Definition and Meaning - Ikajo Glossary


Convenience fee

The convenience fee is a fee the customers pay for the convenience of the alternative payment methods they use. The fee needs to answer the bona fide principal.

What does this mean? Let’s assume you run a small movie theatre. The usual way you sell tickets is face-to-face. You notice a big volume of customers over the holidays. You decide to run an online website to sell tickets there as well as to offer more convenience to your clients. That way of selling the service is not typical for you. Plus, you provide bona fide values to your customers. In this case, you have a permit to charge a convenience fee.

This fee type is beneficial for the merchant as it can partly cover the extra spending. The extra spending arises when the seller starts accepting payment cards. The merchant will face processing fees regardless of what option they choose – POS or website.

Also, it’s important to remember that different countries have different rules regarding convenience fees. For instance, the convenience fee is prohibited in ten US states and is fine in the other 41. At the same time, merchants cannot charge extra fees in the European Union.

On top of that, every card networking has its regulations regarding convenience fee assessing. Nevertheless, the general rule stays equal for all. Merchants must notify their customers that they charge a convenience fee.

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