A fee to pay? What’ll they think of next?

You probably don’t want to know. But companies are now routinely charging customers a fee (most of it is pure profit to them) to pay their bills. The latest, reports the Los Angeles Times, is a fee to pay a Verizon phone bill.

Beginning Oct. 16, Verizon Communications will charge $3.50 for any nonrecurring payment using a credit or debit card. In other words, if you don’t sign up for their regular bill-paying program and prefer to pay each month with plastic, you’ll pay more.

If that sounds as outrageous to you as it does to me, brace yourself: Other businesses, including credit cards, charge in the “pay to pay” scheme. You could be the next victim.

Chase bank, for example, says on its statements that “Chase Fast/Pay is a quick and convenient payment option … with one simple phone call.” If you need help from a living, breathing service rep, the charge is $20, according to the Times.

But even if you use Chase’s automated phone system, the charge is still $15.

But as I’ve reported on my travel blog, these “convenience fees” have been around a long time, and appear to be spreading.

Analysts believe the “convenience” fee for buying an airline ticket with a credit card has a bright future, and that it’s only a matter of time before being widely adopted.

Perhaps the only reason more airlines don’t charge them yet is that they may be interpreted as a violation of existing credit card merchant agreements in the United States. Germany recently banned the Irish airline RyanAir from charging a credit card fee.

Still, there’s immense pressure from the airline industry to add “convenience” fees to their tickets, and industry-watches say it’s just a matter of time before figure out a way to do it legally.

Companies are walking a fine line. If customers don’t like these fees, they’ll leave. A survey released just today suggests the American consumer is downright trigger-happy, when it comes to leaving a business.

Maybe that’s something companies should consider when considering these new fees.

(Photo: Casey/Flickr Creative Commons)

  • Katie

    Unreal. They started charging us to talk to a person when online payment systems became available. Now they want to charge us for the privilege of giving them money at all? Not acceptable. Airlines that adopt this practice will absolutely not have me as a passenger; there’s sure to be at least one holdout, and that’s the one I’ll fly.

  • Kelly

    Verizon is late to the program! Sprint already started that a few months back, even with paying with your checking account. Super ridiculous! I was furious when I saw that, but I am now on the recurring payment plan, 1) because I didn’t want to pay the ridiculous fee and 2) I am always paying on time now.

    Was it never announced about Sprint doing this?

  • cjr

    Unfortunately, there’s only so many companies you can walk away from before you’re left with no options. Particularly when it comes to utilities and TV services (some people can’t get satellite).

    Because nothing says great service like paying more for less. Blah.

  • Joe R

    The main reason that I don’t use the auto-pay on most services is that they don’t necessarily have fixed monthly costs. With auto-pay, on a given day of the month, the amount will come out no matter what, even if there’s been an unexpected spike or even error in the bill. Or if the service increases its costs on something, I might not catch it right away.

    I like being able to see a bill, analyze it, and then schedule the payment based on my pay dates. If I have to pay extra for doing that, I’ll leave.

    Of course, with mandatory contracts on things like cell phones, they’ve pretty much got you coming and going since you can’t break contract without penalty.

    Nice racket!

  • DaveS

    Since I travel so much, I pretty much have everything on automatic payment plans. Clearly that part of it is cheaper for the company, so to encourage it has some legitimacy.

    A so-called “convenience charge” to use a credit card? That’s baloney. It will certainly drive me to a competitor. Actually that’s common practice already with respect to the “currency conversion fees” that most credit card exact when you use their products outside the U.S. They perform no extra service – they just take your money because they can get away with it. So I use Capital One. It’s extremely rare that I will use such a fee-charging card when traveling. I always call and tell them I’m traveling, so I have the card available should I need it, but I also tell them I will try very hard not to use it, because of the ripoff fee.

  • B Buchanan

    The Other Side of the Fence:

    I am a partner & co-founder of a business, but something I always try to remember is that I am also a Consumer.

    While I do not believe (as a Consumer or Business Owner) in outrageous fees that leave a Consumer backed into a corner with no other option for payment of a bill than one that includes having to pay a fee, I do understand the decision by some business to charge a fee for some payment options.

    The other side of the fence, the driving force behind these additional fees can actually originate from the Transaction Processing or Credit Card Companies themselves. While some Companies are using these additional fee charges to abuse their Customers, other Companies are simply attempting to offset “real” operational costs.

    For Example:
    If you look at Paypal, while there is no charge for sending money to a Vendor (depending on how you “code” your transaction). In order for a Vendor/Business to process credit cards Paypal charges the Vendor/Business a $30 fee monthly ($30.00 –Virtual Terminal) in addition to the fee from the Credit Card Company (3% + $0.30 –depending on transaction amount).

    This is only one example, others include the Credit Card Company fee (a percentage amount of the total transaction amount), along with the monthly fee for equipment rental, a fee for charges related to a dedicated phone line for credit card equipment to communicate with the Credit Card Company’s computer system (approx $28.00 per month, not including installation). There are many different options for Companies setting-up Credit Card processing, most initially related to a Company’s monthly sales volume. I know that Visa, and more recently Amex raised the amount of their percentage charges.

    All of those monthly, transaction, equipment, and communication fees are easy to absorb if you are a large Corporation that offers a large product line, with a large client base and if you have a high gross profit margin. However, for a small business these charges are a lot more difficult to distribute and recoup. Yet, as a Business it is still advantageous to offer your Customers the option to pay by credit card, so how do you reach a happy medium?

    In my business’s case, we elected to absorb the monthly charge of $30.00, and to pass along to Customers that elect to pay by credit card, a standard credit card transaction fee as a percentage of the total transaction amount. Note: we do have this fee amount outlined in our Terms, and before processing any credit card transaction, we ensure the Consumer is well aware that there is a fee. We also offer the standard no fee method of paying by check or cash.

    So, before you condemn all Companies for these fees, you should understand where and why they originate. If you believe that Companies are not recouping these fees from Consumers, I assure you that theses fees are, either out in the open on the front end or they are on the back end by the Company raising prices across the board on products.

  • Jahnay

    How about the nerve of a New York State electric company charging a fee to receive a bill. It’s called a “Bill Issuance Charge”: the cost to produce and send the customer a bill and process the payment.

    What will they think of next? This is just to prepare us for a really big rate hike.

  • Heather

    Hey…NO US company can charge you for using a credit card!
    That’s part of the agreement they signed with the cc co to be
    able to accept the cards for payments! And no minimums to be
    able to use the cc.

    If they are doing it, the consumer is ignorant of this fact, and
    has not challenged them! Wake up folks…know your rights!

    Additionally, with the new cc rules coming into effect this year,
    businesses CAN reduce the cost of services if paying with
    cash. This was something they agreed NOT to do in the
    same agreement! Sad and pathetic…choosing what rules to
    follow and what rules NOT to follow, if it’ll put more “stolen”
    money into their pockets.

  • http://www.facebook.com/profile.php?id=530479200 Dana Scheider

    This article was put up almost a year ago; to my understanding, recent federal legislation in the US has put the kibosh on most convenience fees for credit card payments. Is that the case? Has any legislation addressed fees like this for other things?