Is This Legal

I get this question a lot.

"Interesting, but, I am concerned. Is it legal in my state to charge a fee for accepting credit card payments? How did you get the exception?"

I very, very, very much appreciate this concern.

Individual State General Business Laws

There are 11 states that currently have laws on the books addressing you - the actual merchant - charging a surcharge based on method of payment. However, every state allows certain third parties to charge a fee for the service the third party provides in the safe and secure delivery of the payment data into and out of the card payment network.

The states with laws addressing this issue we are aware of as of Oct 2008 are:

California, Colorado, Connecticut, Florida, Illinois, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.

We understand the key to our service in these states is that our payment is from the person making the payment - the same way Federal Express charges the person sending the package, and our business relationship is with the person making the payment when they agree to pay and accept our fee.

Individual State Insurance Departments

We have received a formal, written Opinion form the New York Department of Insurance specifically allowing our Electronic Payment Delivery Service. Here is a link to that Opinion:

New York Insurance Department Opinion

You will note that New York has been asked about various other services in the past and consistently denied those options. Here are links to those published Opinions:

Credit Card Premium Payment

Credit Card and E-Check Transaction Fee

Credit Card and Electronic Payment Fees

Credit Card Surcharge

Credit Card Service Company

In talking to numerous other state Insurance Departments we believe the logic of the New York Department is accepted by all other states.

The Federal Election Commission

We received this favorable Advisory Opinion from the Federal Election Commission:

FEC Advisory Opinion

Our Advisory Opinion is in 2007 titled AO 2007-04 Atlatl.

The Standard Merchant Agreement and Visa's Rules

Your Merchant Services Agreement also speaks directly to this. Under that agreement you are not allowed to charge any surcharge based on using a credit card to make a payment. You are allowed to offer a cash discount. This is how gas stations on the Interstate can have one price for cash and another price for credit. If you are in a regulated industry, you probably have no ability to offer a cash discount.

What we do at Simply Easier Payments is legal under the proper conditions in all 50 states plus Canada. We are not breaking any new ground here - this has been in place in the school tuition industry and in utilities for over 9 years now.

Compliance is the job of Moneris' (1200 total employees) legal department and compliance departments. Rules and laws change and one of our jobs in providing this service is to change to stay in compliance. We actually have an independent third party approved by the Credit Card Association do a monthly audit on everything we do to be certain we stay in compliance.

The two main criteria for being allowed to charge a convenience fee are under the Visa Rules

1 - The method of payment has to be a secondary method of payment. In other words your client can still send a check or pay in cash, etc.

2 - The person making the payment must be made fully aware of the Convenience Fee charge - it has to be shown separately on the payment screen, on the receipts and on the credit card statement - and the person making the payment has to actively indicate acceptance of the fee. We require the client to acknowledge by checking a check box to that end.

Of course, you still have to be in compliance with all other state, federal and industry regulations even if Visa's Rules allow this.

I hope this addresses your concerns. Please call me - Duke Williams - 800-768-0907 - if you have more questions.