Maryland Insurance Agents and Convenience Fees

Limits on Insurance Payment Convenience Fees in Maryland

Convenience fees are the surcharge a business adds to a payment if the person making the payment is using a credit or debit card to make the payment.

Maryland makes a specific exception for convenience fees for insurance agents.

Here is the link...

http://insurance.maryland.gov/Insurer/Documents/bulletins/17-10-Credit-Cards-Accepted-for-Insurance-Payment-Premiums.pdf

The document says this:

Bulletin 17-10

Date Sept 22, 2017

Guidance in Determining the Charge for Actual Expenses by a Licensed Insurance Producer or Qualified Surplus Lines Broker

A licensed insurance producer or a qualified surplus lines broker may set the charge for making payments by credit card at a rate equal to:

1 - the actual expense to be charged at the time of the transaction; or

2 – an amount that is less than or equal to the actual expenses incurred.

Visa Rules on Convenience Fees

Visa's rules on convenience fees require the business (merchant) to make the same flat dollar amount charge on every convenience fee regardless of the amount of the payment.

Example under Visa's Rules:

1 - Customer pays business $100. The business charges a $5.00 convenience fee.

2 - Customer pays business $1,000. The business must charge the same $5.00 convenience fee.

NOTE: Visa does not allow a percentage to be charged for convenience fees.

Here is the Conflict Between Maryland and Visa

Credit card transaction cost are made up of several fees. The largest and most discussed of these fees is the "Discount Rate"

"Discount Rates" are always a percentage.

The actual "Discount Rate" charged fro each payment varies based on the brand of card - Visa, MasterCard, AMEX, DiscoverCard - and the issuing bank or the card, and whether the card is a business or personal card, etc.

The business accepting the card payment has no way of knowing the actual cost of the card transaction in real time.

Maryland only allows the actual expense or less to be charge.

Problems:

1 - You have no way of knowing this amount
2 - Visa requires you to charge the same flat amount for every payment

These two requirements simply cannot both work.

Solution

Using Simply Easier Payments moves the fee away from the agency. You are not charging the fee. That frees us to only have to comply with the Visa Rules - which we do.