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#1484278 - 12/22/10 07:33 PM Debit/Credit Card Payment Convenience Fee
villenbe Offline
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Is there anything that prohibits our bank from charging a "convenience fee" for loan payments that are made over the phone with a debit/credit card? Other than the limitations the card provider VISA/MC might have?

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#1491992 - 01/07/11 08:58 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Compliancer Offline
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There is no federal law/regulation regarding this other than the requisite disclosures. Of course check your state regs but off the cuff, I am not aware of anything.

I caution you to be thorough in your application of the fee to avoid running afoul of the associations (Visa and MasterCard - I am unaware of how AMEX or Discover operate). You would have to apply the convenience fee to any and all phone transactions for loan payments. For example, if you accept check information over the phone, you would have to charge the same fee for that that you would for card payment even if your institution owned the checking account.

You would also have to provide a way for the consumer to pay with the debit/credit card without incurring the fee - such as accepting the payment in person at a branch, using an IVR instead of using a live operator, using the Internet, etc.
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#1492010 - 01/07/11 09:08 PM Re: Debit/Credit Card Payment Convenience Fee [Re: Compliancer]
rlcarey Online
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The VISA operating rules prohibit a merchant (the bank in this case) from taking a VISA Credit Card for a payment on another loan. Not sure about Mastercard, but it is probably the same.

See Visa U.S.A. Inc. - Operating Regulations 5.2.F Prohibitions

Effective October 4, 2008, accept a Visa Consumer Credit Card or Commercial Visa Product, issued by a U.S. Issuer, to collect or refinance an existing debt
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#1492099 - 01/07/11 10:06 PM Re: Debit/Credit Card Payment Convenience Fee [Re: rlcarey]
BrianC Offline
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MasterCard Operating Rule 5.9.2

A Merchant must not directly or indirectly require any Cardholder to pay a
surcharge or any part of any Merchant discount or any contemporaneous
finance charge in connection with a Transaction. A Merchant may provide a
discount to its customers for cash payments. A Merchant is permitted to charge a
fee (such as a bona fide commission, postage, expedited service or convenience
fees, and the like) if the fee is imposed on all like transactions regardless of the
form of payment used, or as the Corporation has expressly permitted in writing.
For purposes of this Rule:
1. A surcharge is any fee charged in connection with a Transaction that is not
charged if another payment method is used.
2. The Merchant discount fee is any fee a Merchant pays to an Acquirer so that
the Acquirer will acquire the Transactions of the Merchant.
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#1492201 - 01/10/11 04:14 AM Re: Debit/Credit Card Payment Convenience Fee [Re: BrianC]
Paul Marshall Offline
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Visa offers a Merchant Incentive program for loan payments using debit cards, it charges a highly reduced interchange fee plus a 50 cent fee. You have to register for it, and more information caan be found on Visa Online - Login and Search for Visa Debt Repayment Program

" — for select debt repayment merchants, i.e., student loans, consumer mortgages, consumer auto loans, and consumer credit cards, in order to encourage the repayment of collectible consumer debt with a Visa debit card. "

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#1494963 - 01/13/11 08:39 PM Re: Debit/Credit Card Payment Convenience Fee [Re: Paul Marshall]
AlohaState Offline
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I called Visa directly and spoke to the Dispute and Analysis Support analyst named Peggy. The number is 650-432-2888. She said that there are no Visa Rules that prohibits the use of credit cards to pay loans. The only prohibition is for a Visa credit card to pay another Visa credit card.

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#1495016 - 01/13/11 09:22 PM Re: Debit/Credit Card Payment Convenience Fee [Re: AlohaState]
rlcarey Online
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You might want to call "Peggy" back and have her refer to the VISA Operating Rules:

5.2.F Prohibitions

A Merchant must not:

Effective October 4, 2008, accept a Visa Consumer Credit Card or Commercial Visa Product, issued by a U.S. Issuer, to collect or refinance an existing debt
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#1511090 - 02/16/11 10:01 PM Re: Debit/Credit Card Payment Convenience Fee [Re: rlcarey]
CrazyTimes Offline
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Really not sure anymore
I am glad I have found this thread. I was asked today about accepting Visa and Mastercard payments for consumer loans.
I am having a hard time finding 5.2.F Prohibitions in the VISA Operating Rules. Could you post a link? I would like to be able to read it before passing it on.
Thanks
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#1511100 - 02/16/11 10:11 PM Re: Debit/Credit Card Payment Convenience Fee [Re: CrazyTimes]
Derwood Offline
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It can be found on page 410 of the Oct. 15, 2010 Visa International Operating Regulations. Here is the link to the pdf http://usa.visa.com/download/merchants/visa-international-operating-regulations-main.pdf
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#1511110 - 02/16/11 10:26 PM Re: Debit/Credit Card Payment Convenience Fee [Re: Derwood]
CrazyTimes Offline
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Really not sure anymore
Thank you. smile
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#1511770 - 02/17/11 11:40 PM Re: Debit/Credit Card Payment Convenience Fee [Re: CrazyTimes]
Andy_Z Offline
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I'm sorry for the post, after hours humor here, but since I've been watching the credit card rewards commercials, "Peggy" really lacks credibility.
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#1782084 - 02/01/13 04:07 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Doug Hendrickson Offline
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Given all of the discussion surrounding 'convenience fees' lately (court cases, settlements and such), my boss asked:

"The question is, can a merchant charge a customer a convenience fee for using a credit card. They basically tell customers that they charge $3 extra if you want to use a card. Can this still be done? The pointed me to an article which I have not yet read stating this was going to become illegal. If true, I assume there will be other folks we should make aware of this."

I've only just started to read on the court cases, but could someone in the know please shed some light on this issue as it stands today?
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#1782113 - 02/01/13 04:48 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
LorBeth Offline
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go to VISA's posting at http://usa.visa.com/personal/using_visa/checkout_fees/index.html
Effective 1/27/13, merchant "checkout" fees are permissible in 40 of the 50 states; list is included on the webpage. (Haven't heard whether MasterCard will do the same.)
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#1782136 - 02/01/13 05:17 PM Re: Debit/Credit Card Payment Convenience Fee [Re: LorBeth]
Derwood Offline
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Originally Posted By: LorBeth
go to VISA's posting at http://usa.visa.com/personal/using_visa/checkout_fees/index.html
Effective 1/27/13, merchant "checkout" fees are permissible in 40 of the 50 states; list is included on the webpage. (Haven't heard whether MasterCard will do the same.)


Yes Mastercard will also be allowing the merchants to surcharge in those 40 states. It is part of a court settlement that both Visa and Mastercard were involved in. Here is a link to Mastercards summary of the surcharge rules for their merchants http://www.mastercard.us/merchants/support/surcharge-rules.html

Visa's is here http://usa.visa.com/merchants/operations/surcharging.html?ep=v_sym_merchantsurcharging
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#1782143 - 02/01/13 05:25 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
rlcarey Online
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I'm wonder how they actually plan to do this, as these surcharges from the merchant will be considered finance charges under Regulation Z and will have to be handled as such on all the periodic statements. I see a consumer class action lawsuit following soon.
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#1782160 - 02/01/13 05:44 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
LorBeth Offline
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since this thread is labelled "Debit/Credit...Convenience Fee" I feel compelled to note that we are no longer talking about convenience fees, but rather surcharges (or "checkout" fees). AND these are only permissible for Credit cards, not debit cards, in the 40 states allowing.
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#1782203 - 02/01/13 06:49 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Derwood Offline
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Good point LorBeth.

Randy - I'm looking at 1026.9(d) and it seems to exempt these finance charges from the periodic statement requirements of 1026.7.

(d) Finance charge imposed at time of transaction. (1) Any person, other than the card issuer, who imposes a finance charge at the time of honoring a consumer's credit card, shall disclose the amount of that finance charge prior to its imposition.

(2) The card issuer, other than the person honoring the consumer's credit card, shall have no responsibility for the disclosure required by paragraph (d)(1) of this section, and shall not consider any such charge for the purposes of §§1026.60, 1026.6 and 1026.7.
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#1782296 - 02/01/13 08:35 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Andy_Z Offline
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I haven't seen court cases on the newest iteration of checkout fees being charged. The merchant I had my encounter with clearly had a sign, but neither offered "debit or credit" and charged this a few days earlier than allowed.

I believe that it is for credit cards (though some states prohibit it on credit cards) but includes debit cards in that definition. I haven't seen the rules or definitions for the rules, so this is speculative. The media describes it all as "credit cards" but they haven't always had the whole story in the past.

Anyone have official clarification?
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#1782298 - 02/01/13 08:38 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Andy_Z Offline
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I also want to see something about how this cost is passed on to the consumer because this is what the bag bad banks charge - but the merchant isn't handling or counting cash, assembling bank deposits with it and having a trusted employee or armored car service pick it up. Seems to me the win-win aspect are both on the merchants side.
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#1782308 - 02/01/13 08:44 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
LorBeth Offline
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From the Visa website http://usa.visa.com/personal/using_visa/checkout_fees/index.html:

What This Means for Consumers

Consumers will pay an additional fee when they use their credit card at retailers that decide to surcharge.
Consumers should be aware there are limits to the amount merchants can surcharge. *
Retailers are permitted to apply a surcharge to only credit card purchases and cannot impose a surcharge for purchases made using a debit or prepaid card.
If retailers intend to impose a surcharge on credit card purchases, they are required to notify customers before customers make an actual purchase at the store entrance and at the point of sale – or in an online environment, on the first page that references credit card brands.
Retailers must disclose surcharge fees on every receipt – both in store and online. Carefully review receipts where checkout fees should appear.

Retailers Can Offer a Discount for Cash and Check Purchases
Retailers can encourage their customers to use other forms of payment, such as cash and checks, and can discount for PIN debit and cash and checks.
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#1782320 - 02/01/13 08:52 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Andy_Z Offline
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Is MasterCard mirroring this?
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#1782331 - 02/01/13 09:05 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
LorBeth Offline
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Yes, Mastercard also - Derwood posted info at 11:17 above
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#1892903 - 02/03/14 03:20 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
NoJustNo Offline
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The fact that debit card fees are not allowed is just tied into the settlement agreement, right? There is no direct citation (other than states that do not allow such fees)?
Last edited by gomizzou; 02/03/14 03:21 PM.
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#1940410 - 07/14/14 03:57 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
fslic banker Offline
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Question is whether the bank can induce a payment on a consumer loan by allowing borrowers to pay online which would trigger a 2.9% fee from a third party which would be passed from the bank to the consumer. Earlier threads seemed to indicate that MC and Visa rules prohibited acceptance of a loan payment from a consumers credit card account. This thread seems to indicate that MC and Visa now may allow consumers to call their creditors, such as banks, and pay their loan payments by MC or Visa and would also allow the bank to pass along the fee, charged by a third party facilitator, for such a charge to the consumer. Thoughts?

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#1940517 - 07/14/14 06:04 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
fslic banker Offline
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Question is whether the bank can induce a payment on a consumer loan by allowing borrowers to pay online which would trigger a 2.9% fee from a third party which would be passed from the bank to the consumer. Earlier threads seemed to indicate that MC and Visa rules prohibited acceptance of a loan payment from a consumers credit card account. This thread seems to indicate that MC and Visa now may allow consumers to call their creditors, such as banks, and pay their loan payments by MC or Visa and would also allow the bank to pass along the fee, charged by a third party facilitator, for such a charge to the consumer. Thoughts?

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#1969460 - 10/15/14 03:31 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
Serendipity Offline
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I also have the same question. Have there been any updates on this? This seems like something the CFPB would be weighing in on from a "consumer protection' standpoint.

Our bank is worried that the fee that is passed on if we collect a payment on a mortgage from a credit card is considered an APR finance charge for the mortgage.

My thought is no, however that doesn't mean we should be collecting mortgage payments from credit cards.

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#2075311 - 04/22/16 09:12 PM Re: Debit/Credit Card Payment Convenience Fee [Re: fslic banker]
LA Guns Offline
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It didn't appear the last 2 questions were answered regarding if a bank can accept loan payments with credit cards and/or debit cards. In one instant you indicated no and then yes. The links above that are supposed to take you to the Visa Operational Manual no longer work. Please let me know if banks can accept these types of payments and if the bank can charge a fee for the service. If so, does it have to equal the charge from the vendor or can we upcharge it? Thank you.

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#2075342 - 04/23/16 06:57 AM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
BrianC Offline
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This thread covers a span of several years and has been dormant for 18 months. Card brand rules change, links to their operating rules change.

VISA's most current rules are dated October 2015 . - They say that you can collect debts using debit cards and prepaid cards, not credit cards.

5.9.10.1 Collection or Refinancing of Existing Debt – US Region (Updated)
In addition to the requirements in Section 1.5.5.4, β€œPayment of Existing Debt,” a US Merchant or
Acquirer may accept a Card to collect or refinance existing debt only if it complies with all of the
following, as applicable:
● If a Merchant is registered as a Limited Acceptance Merchant of eligible Visa Debit Category Cards
(including Visa Prepaid Cards) in all channels where payments are accepted. The Merchant may
accept all Visa Cards for any of its other lines of business that do not collect payments on existing
debt.
● Is assigned MCC 6012 (Financial Institutions – Merchandise and Services) or 6051 (Non-Financial
Institutions – Foreign Currency, Money Orders [not Wire Transfer], Stored Value Card/Load, and
Travelers Cheques)
● Accepts payment for any type of debt, excluding debt representing payday lending
● If accepting payment for debt that is considered uncollectible, all of the following:
– Is assigned MCC 6012 (Financial Institutions – Merchandise and Services)
– Does not conduct Recurring Transactions to collect the uncollectible debt
– Is able to collect the debt in a lawsuit
Debt - An advance of money borrowed by one party (debtor) from a third party (creditor). Debt is not direct payment to a
merchant for goods and services whether paid in full, in installments, or at a later date.
Uncollectible - Debt that has been charged-off or sold to a non-financial institution for the purpose of debt recovery

VISA Rule 5.6.2.1 says that a convenience fee is permissible if the following conditions are met. Note you must charge the same fee for all payment methods including card payments, check by phone or ACH payments.

Charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant's customary payment channels and not charged solely for the acceptance of a Card.

Added only to a Transaction completed in a Card-Absent Environment

Not charged if the Merchant operates exclusively in a Card-Absent Environment

Charged only by the Merchant that provides goods or services to the Cardholder

Applicable to all forms of payment accepted in the payment channel

Disclosed clearly to the Cardholder:
● As a charge for the alternative payment channel convenience
● Before the completion of the Transaction. The Cardholder must be given the opportunity to cancel.

A flat or fixed amount, regardless of the value of the payment due

Included as part of the total amount of the Transaction and not collected separately

MasterCard Rules permit convenience fees provided that they are charged the same regardless of payment method. MasterCard also sets limits based on your discount rate in Chapter 16 of the rules. (These are lengthy so I am not posting them here.)

5.11.2 Charges to Cardholders
A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any
part of any Merchant discount or any contemporaneous finance charge in connection with a
Transaction. A Merchant may provide a discount to its customers for cash payments. A
Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited
service or convenience fees, and the like) if the fee is imposed on all like transactions
regardless of the form of payment used, or as the Corporation has expressly permitted in
writing.
For purposes of this Rule:
1. A surcharge is any fee charged in connection with a Transaction that is not charged if
another payment method is used.
2. The Merchant discount fee is any fee a Merchant pays to an Acquirer so that the Acquirer
will acquire the Transactions of the Merchant.
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#2075346 - 04/23/16 01:07 PM Re: Debit/Credit Card Payment Convenience Fee [Re: villenbe]
LA Guns Offline
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Posts: 23
Thank you so much for the information BrianC, but most of all, your time!!! It's greatly appreciated.

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