Guidelines for Accepting Credit Cards as a Form of Payment for Education, Registration and Other Fees

In recent years, the use of credit cards as payment for card acceptance … this area is the cost cards accepted for payment, ….

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Guidelines for Accepting Credit Cards as a Form of Payment for Education, Registration and Other Fees

  1. Departments should consider whether accepting credit cards provides benefits, quantifiable or qualitative, that help justify the additional cost. Common benefits include:
    • Assured payment (once a transaction is properly authorized there is little risk of return other than the chargeback rights of the cardholder.)
    • Automation of payment collection (assuming the department makes necessary investments in technology to implement systems and processes that replace manual ones)
    • Customer service convenience, especially when payment over the web or telephone are offered.
  2. If a department chooses to accept credit cards, it must be able to comply with all credit card rules and regulations as well as the terms specified in UC’s contracts and service agreements with its vendors.
  3. Departments should consider the appropriateness of increasing prices versus charging a surcharge or convenience fee, as charging additional fees tends to discourage usage of credit cards and raises sensitivity to fees in general.
  4. If departments decide not to accept credit cards as a form of payment, they should consider ‘educating’ their customers as to why this is the case (e.g. additional cost would take away from academic programs or other services, department is focusing resources on other priorities, etc.).

Guidelines for Assessing Convenience Fees

  1. Visa, Mastercard and America Express prohibit charging a ‘surcharge’ for use of a credit card.
  2. Only one card company, Discover Financial Services, allows assessment of a surcharge for payment using their card. This program is available only to government entities and Universities, and is only applicable when Discover is the only card accepted. The surcharge can be assessed on ‘traditional’ payment channels such as face-to-face, mail, or person-to-person telephone interaction as well as ‘convenient’ payment channels.
  3. While Visa, MasterCard, American Express, and Discover prohibit surcharges (with the Discover exception noted above), all allow the assessment of a ‘convenience fee’ to cover the costs of providing an automated payment channel, such as Interactive Voice Response (IVR), kiosk-based interfaces or the Internet.
  4. For Visa and Mastercard, Convenience fees charged for web, kiosk or IVR payment channels must be charged uniformly to any payment type accepted via that payment channel. In other words, even though the cost for ACH payments is much less than for credit card payments, and different credit card companies charge different rates, the same convenience fee must be charged for any web, kiosk or IVR transaction, regardless of the payment type used.
  5. American Express allows assessment of convenience fees for mandatory enrollment fees or room and board only.
  6. If Visa is among the cards accepted and a convenience fee is charged, the fee must be a flat and reasonable amount, regardless of the amount charged.
  7. Visa requires that the convenience fee be included in the total amount of the transaction charged to the cardholder.
  8. All cards require that the convenience fee be disclosed prior to completion of the transaction, and that the cardholder is given an opportunity to cancel the transaction if desired.
  9. Variable rate convenience fees for all types of credit cards (except as prohibited by VISA) should be reasonable, and should not generate a profit.
  10. Utilizing a third-party to accept credit card payments over the web or IVR is permissible, however such services must be approved by the Office of the President Banking Services Group.
  11. All third-party providers must comply with these UC Guidelines.

Definitions (in logical, not alphabetical order)
Merchant – an entity accepting credit cards as a form of payment. Discount Fees – the fees paid by the merchant (UC) accepting a credit/debit card for payment. interchange, which is charged by the Visa or Mastercard Associations. Interchange fees are paid to the bank that issued the credit card (our customer’s bank), even though those fees are collected by the acquiring/merchant bank (our bank used for our credit card processing). Bank Card – a Visa or Mastercard charge card issued by a bank that is a member of the Visa or Mastercard Association. American Express and Discover Cards – charge cards issued by those companies directly to the cardholder. Debit card – a card issued by a bank to a checking or savings account holder to access funds in their bank account. Payment Channel – way that a payment is received. Mail (including drop boxes), in-person/over-the-counter, and telephone (interaction with a live person) are traditional payment channels. Payment Type – cash, check, Automated Clearing House (ACH) debit (sometimes referred to as electronic check), ATM debit card (PIN-based), credit card, or Visa/Mastercard debit card (signature based). Credit Card Surcharge – a fee charged to the card holder for paying with a credit card, whether charged separately or reflected in a higher price, that is not charged to someone paying via another payment type such as cash or check. Convenience Fee – a fee charged for the convenience of paying via an automated payment channel. In practice, convenience fees are charged for internet, self-service kiosks or Interactive Voice Response (IVR) payment channels. Flat fee – a flat dollar amount charged, regardless of payment amount Variable rate fee – a fee that varies based on the amount paid. May be percentage based or tiered.

Download Guidelines for Accepting Credit Cards as a Form of Payment for Education, Registration and Other Fees pdf from www.ucop.edu, 6 pages, 44.17KB.