What is a convenience fee or pay-to-pay fee? | Consumer Financial Protection Bureau (2024)

FAQs

What is a convenience fee or pay-to-pay fee? | Consumer Financial Protection Bureau? ›

When a debt collector charges you a convenience fee, it's only legal if you agreed to the fee when you first took out the debt, or a law specifically allows the fee. A pay-to-pay fee – also known as a convenience fee – is a fee charged by a company when you make a payment through a particular channel.

A convenience fee is a fee charged by a business for payments made through an alternative channel, rather than by cash, check, or ACH. Typical cases where convenience fees are charged include payments for taxes and tuition. The fee is typically a fixed amount or a percentage of the sale.

A convenience fee is an additional charge added for customers paying with alternative, non-standard payment methods. These allow you to help offset the cost of processing these non-standard methods, while also providing an easy payment option for customers.

Section 1692f of the FDCPA prohibits a debt collector from collecting “any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”

One option is to use cash, check, or an ACH transfer. These methods typically do not incur convenience fees, making them a cost-effective alternative. Another option is to make payments by mail if a business charges a convenience fee for online or phone payments.

A convenience fee is levied by a merchant for offering customers the privilege of paying with an alternative non-standard payment method. Merchants can process convenience fees in all 50 states. A surcharge is levied by a merchant for customer purchases made with a credit card.

A convenience fee is a charge you pass on to your customers for using a payment method that is not standard for your business. For example, let's say you run a movie theater and typically sell tickets at the box office, where you can accept cash and may have a low-cost credit card processor.

The good news is that while the legality of surcharges has been murky in the past, as of 2023, credit card surcharges are now legal in all U.S. states except for Connecticut and Massachusetts. (Credit card surcharges are also prohibited in Puerto Rico, just in case you were wondering.)

In most U.S. states, adding convenience fees to credit card transactions is legal, but there are still rules businesses must follow when doing so. Learning about the convenience fee rules that affect your area can help ensure you aren't overcharged on your credit card transactions.

The Consumer Financial Protection Bureau (CFPB) is issuing this advisory opinion to affirm that the Fair Debt Collection Practices Act and Regulation F prohibit debt collectors from charging consumers pay-to-pay fees (also known as convenience fees) for making payment a particular way, such as by telephone or online, ...

Is it necessary to pay convenience fee? ›

The reason that many venues charge a convenience fee is that the bank and processor service both take a small percentage from each credit card payment the business processes. Worse for companies, this is not an absolutely predictable amount because each individual transaction could come with additional costs.

No, Convenience Fee is non-refundable.

While the rewards you earn from a credit card can help offset some of the cost of the fee, the charge is often more than what you'd earn in cash back, points or miles. As a result, it's best to avoid credit card convenience fees in most cases.

Convenience fees are legal in all 50 states but must be clearly communicated at the point of sale. Additionally, a convenience fee can only be imposed if there's another preferred form of payment as an option.

Customers can often avoid credit card convenience fees by opting for alternative payment methods that do not incur additional charges, such as debit cards, cash, or electronic bank transfers.