Why Did I Get Charged A Credit Card Convenience Fee? - Shift Credit Card Processing

Why Did I Get Charged A Credit Card Convenience Fee?

What is a Credit Card Convenience Fee?

Even if you know all the credit card basics, from credit card debt to building credit and a good credit score, you still may not have heard of a credit card convenience fee.

Credit card convenience fees are commonly confused with credit card surcharges. The difference, however, is that a credit card convenience fee will be applied only in situations where the customer uses a more unconventional form of payment. 

person making a payment using Apple Pay on their smart watch

A common occurence of a credit card convenience fee would be paying with a credit card on a cell phone. So paying with a service such as Apple Pay may present a convenience fee to the customer in order to do so.

Credit card issuers, like Visa Mastercard or Capital One, have different policies regarding credit card convenience fees. Most brands like American Express, however, agree that the charged percentage must remain flat across all people and can only take place if the purchase is being made through an alternate channel.

Requiring that the convenience fee only be charged on purchases made through an alternate channel keeps the business from actually entering into surcharge territory. 

When merchants charge a convenience fee to the customer through a standard payment channel, it would actually be a credit card surcharge. 

Why Do Some Businesses Charge a Credit Card Convenience Fee?

Some businesses decide to charge a credit card convenience fee to offset the cost of accepting that payment method. Some credit card processors will charge their businesses more to accept credit or debit cards. 

However, when a credit card convenience fee is charged, it is because the customer chose to pay through an alternate payment channel. The most common example of an alternate payment method would be mobile payments. 

With technology advancing and mobile payments becoming more and more common, some processors have realized that there is an opportunity to charge businesses an additional fee to accept credit cards through a mobile wallet or another alternate payment method.

So, businesses do not implement an additional fee just to see a little extra income off of their customers. Instead, it is purely done to offset the cost that they have to pay their credit card processor.

Many companies, unaware of a credit card convenience fee or a surcharge altogether, choose to offset the processing cost in a different way.

The Other Common Method

Ever since the implementation of credit card processing fees, businesses have been finding ways to offset the cost that they have to pay their processor. 

Very commonly, businesses have just been raising their prices by the same percentage that they have to pay. 

That way, they can move the fee to the customer, and they can avoid any laws associated with convenience fees and surcharges because there aren’t laws prohibiting companies from raising prices higher than a certain amount.

What State is it Illegal to Charge Extra for Credit Card Purchases?

A credit card convenience fee is legal in 40 states, with California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas being the exceptions to the legality. 

Map showing U.S. states where it is legal to use a convenience fee

Credit card convenience fees have essentially the same legality as a credit card surcharge. They have to follow many of the same guidelines that the other program has to.

If a customer needs to return an item, but was charged a convenience fee on it while buying it, the customer receives compensation for the product and the fee.

The Mastercard convenience fee program, for example, allows businesses to charge a convenience fee if their cards are used for purchases as long as the business continues to follow Mastercard’s guidelines. 

When a credit card network like Mastercard, Discover or Visa allows a business to charge the extra fee, they are helping the business save money.

This program makes it OK to charge extra on each transaction, as long as Mastercard’s convenience fee guidelines are met.

Are Credit Card Convenience Fees Legal?

Being that there are a number of states where it is legal to charge an extra fee for credit card purchases, many businesses within those states have been charging that fee.

The fee is purely meant to offset the price that they are charged by their credit card processor to actually process payments made via credit card. However, there are some surcharge regulations that the business has to follow in charging this fee.

The percentage that is charged for the credit card convenience fee can’t be higher than 4%. This usually sets the percentage charged between 2-4%. 

This percentage being low makes a convenience fee not have a huge impact on a small purchase. For example, a 4% charge on a $50 purchase is still only $2. 

However, as the purchase amount of the product grows, obviously so will the fee attached to the product.

In addition to being legal in those 40 states, there is another key factor that plays into making convenience fees legal. The business must alert the customer to the transaction fees before they actually pay for the product.

A customer pricing notice must be visible to inform customers of the customer service charge when paying with a credit card

This protects the customer from paying more than they thought they would be paying and gives them the option to use a different payment method that won’t charge them an extra fee.

Is it Legal to Pass Credit Card Fees to Customers?

It is legal to charge credit card convenience fees to customers using either a credit card convenience fee or a surcharge in 40 of the 50 states. 

When people hear that the purpose of a credit card convenience fee, as well as a surcharge, is to pass the processing fee to the customer, they usually ask this question.

It is legal because both of those types of fees offer the customer an alternative way to avoid paying that fee. With both fee programs, the option of paying with cash to avoid an additional fee is there if the customer wants to take it.

Each transaction will carry the same processing fee. Because of the high price to accept rewards cards and cash back credit cards, the percentage is driven up to cover them.

Is There a Way to Avoid Credit Card Convenience Fees?

Credit card convenience fees are unavoidable if you insist on using the method that will incur the fee. 

However, as long as the business is following the previously stated law of alerting the customer of the fee before the mobile credit card transaction, you have the option to simply pay with a different payment method.

Person debating whether to pay with cash or credit card

If the business is maintaining all applicable laws and charging fair credit card convenience fees, though, there is nothing that the customer can do besides simply change payment methods.

From the Perspective of a Customer

It’s no fun paying extra for the payment method that is most convenient for you. We understand how it feels. 

There’s fees that all of us don’t like. Just the other day, I was hit with a fee for doing a balance transfer from a checking account to a savings account between separate financial institutions.

It can be especially annoying when you don’t have cash and didn’t know that the business that you’re purchasing a product from begins charging convenience fees.

It can feel like you’re almost being cheated at times, like the extra charge is unfair and dishonest to you.

When you feel this way, we encourage you to think like a business owner and realize that they also do not want to have to charge their customers an additional fee. 

However, it is all dependent on the amount that they are charged from their credit card processor to actually process the transaction.

From the Perspective of a Business Owner

Again, we encourage you to put yourself in the shoes of the business owner and think how inconvenient it is for them, too, to have to pay the fee that credit card companies charge them just to accept payment through a non-cash or credit card method.

If they choose to not charge a fee on each purchase that requires them to pay a percentage to their processor, they will lose that percentage on each purchase and it will not be offset by anything, on top of the rest of the annual fees they have to pay to their processor.

How credit card fees affect the merchant

It is purely just a loss that the business will have to incur unless they charge customers the same percentage that they must pay on each of those purchases.

Many businesses have to internally debate whether or not they should charge a fee on purchases that require them to pay a percentage back to their processor. 

On one hand, it can help them offset the cost and basically incur no loss for taking credit card payments through an alternate method. 

On the other hand, it’s charging their own customers more money than they thought they would be paying and they risk the possibility of the customer leaving because of the extra charge.

So it’s not easy for the processor to charge the customer an additional fee, either. They don’t do it purely for a little extra income, but to offset a fairly high charge that they have to pay on each and every purchase made through an alternate payment method.

What Should I Look For in a Credit Card?

Because of the impact that a rewards card can have on the business that processes it, we implore you to compare cards before making a decision on what kind of credit card to get.

While comparing credit cards, find which ones you are eligible for. Some credit cards are only available to people who qualify because of great credit score.

Credit score affects everything in either a positive or negative way. For example, car insurers or life insurance firms will give better quotes to those with better credit score.

It can seem like everything will impact your credit score. Not paying off student loans or personal loans in a timely manner can result in bad credit score.

Even trying to get a business credit card can be tough, depending on business loans that you have received and if they have been paid back. Good credit score can even affect the mortgage rates that you receive from mortgage lenders.

So when looking for credit cards to apply for, keep in mind that your credit score could very well impact the cards that you will qualify for. You may have to settle for cards with lower rewards in order to get a credit card before you are able to build your credit score back up.

When looking for a credit card, it all comes down to personal preference. 


Many guides to credit card convenience fees will have an alternate agenda, likely trying to get you to join their service or buy their product. 

Maybe they’re a third party personal finance blog, trying to show you why credit card convenience fees are a bad thing.  

We just want to show you the ins and outs of charging credit card convenience fees so you’re not surprised the next time you see them. We don’t take a stance either for or against convenience fees.

Here at Shift, we want you to know all about credit card convenience fees so that the next time you see them, you will know what they are and how they work.

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