In this blog, we’ll look at convenience fees. We’ll talk about what they are and explore the benefits of using ACH and convenience fees together to save organizations money on payment processing.
What are Convenience Fees?
As we discussed in our article, “Convenience Fees: Reducing the Cost of Payment Processing,” convenience fees are charged to customers when accepting alternative payment methods outside of the normal payment method.
So, if the normal payment method is a payment by mail, but a customer decides to pay by phone, a convenience fee may be assessed.
Merchants can charge convenience fees for a variety of payments like ACH, credit card, and debit card payments. But merchants must always charge a flat fee for the use of any alternative payment method provided to consumers.
Merchants who assess convenient fees must always disclose that a fee is being charged. Customers must also be made aware that there is also an available payment method that does not incur a convenience fee.
Can You Charge a Convenience Fee with Ever Payment Method?
Typically, regarding payments, convenience fees are charged on a debit card, credit card, or ACH transactions. With debit and credit card payments, convenience fees may only be charged one time. However, with ACH payments, convenience fees can be charged more than once – per ACH transaction.
Benefits of Convenience Fees
Payment processing is not free. There are many costs that come with accepting payments. Usually, companies pay about 3 to 4% per transaction in processing fees. And these fees can seriously add up.
The benefit of charging convenience fees is that it allows organizations to recoup some of the money required to process payments. Unlike credit cards, you can charge a fee for every transaction on a recurring payment plan through ACH.
Recap: ACH, Convenience Fees, and Lowering the Cost of Payments
Payment processing is expensive. Payment processing can cost organizations around 3 to 4% per transaction. Obviously, these fees can add up very fast.
To offset costs, many merchants can charge convenience fees when offering consumers an alternative payment method outside of the normal method of payment. Convenience fees can be charged on a credit card, debit card, ACH and other payment methods that are offered outside of the normal payment channel.
Convenience fees can also be charged on ACH payments. However, unlike other payment methods, with ACH payments, convenience fees can be charged more than just once.
Want to learn more about how to get started with convenience fees to benefit your organization? Contact us using the form below.