05-10-2008, 06:20 PM
They're exploiting a loophole in the credit card merchant agreements that allow for a different price for payments made through a different transaction method. Generally, you can't charge a different price for a credit card transaction than a cash transaction when it's happening over the counter, but since a web transaction is different, they're marking it up with a service fee.
Our local governments and utilities have been in on this deal for a while...they have a third-party company process their online credit card transactions and charge a convenience fee, so that the customer making the payment essentially pays the credit card processing fee as well. (A plus or minus depending on your opinion.)
Most businesses charge the same, but I've seen a couple discussions about this recently as a way for small businesses to recoup the costs of installing and maintaining additional payment systems (even though the apparent effort to process an individual online transaction is less than an in-person transaction).
Our local governments and utilities have been in on this deal for a while...they have a third-party company process their online credit card transactions and charge a convenience fee, so that the customer making the payment essentially pays the credit card processing fee as well. (A plus or minus depending on your opinion.)
Most businesses charge the same, but I've seen a couple discussions about this recently as a way for small businesses to recoup the costs of installing and maintaining additional payment systems (even though the apparent effort to process an individual online transaction is less than an in-person transaction).