Can An Insurance Agency Charge a % Fee
In a seven or eight states there are no insurance specific laws or general business laws which prohibit an insurance agency from charging a convenience fee to their customers who pay by credit card or debit card.
In these states, insurance agents, like any other business, can charge convenience fees or surcharges. These two things - "convenience fees" and "surcharges" - are defined as different things by Visa. Today I will cover convenience fees. In my next post I will cover surcharges.
What an Agency Was Doing
Recently an agent mentioned they were charging a 3% convenience fee on card payments. They were not charging the fee on all lines of business.
2 Violations of Visa Rules
This situation creates the following violations of Visa Rules:
1 - Visa requires a flat dollar fee to be charged for all convenience fees regardless of the payment size
2 - Visa requires that all card payments be charged a fee or that no card payments be charged a fee.
Here are the Rules:
Page 385 of the above document, rule 18.104.22.168
Refer to Table 5-7.
Visa prohibits percentage. Only flat dollar amount can be charged and that amount has to be the same for all payments - Whether a $10 premium payment or a $10,000 premium payment.
"A flat or fixed amount, regardless of the value of the payment due In the AP Region, an ad valorem amount is allowed as required by applicable laws or regulations."
Visa requires all payments made through the payment channel - electronic payments in this instance - be charged the same fee.
"Applicable to all forms of payment accepted in the payment channel"
I hope this is helpful in your understanding of the way you can charge fees in compliance with your Merchant contract.