Visa changed its rules for credit card service fees for higher education in 2012. The rule change meant that colleges and universities can charge percentage-based convenience fees for tuition payments made with Visa cards. Visa’s rule change added Higher Education to VISA’s special government payment program, which allows percentage-based fee rates. The percentage-based rate applies only to SEC 8220 (tuition, fees, and fines) transactions, and not for all campus payments.
Convenience fees are now common at many institutions where they are not prohibited by state law. As of late 2016 eleven states — California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas — and Puerto Rico have laws that prohibit merchants from charging consumers with surcharges on credit card transactions. The laws in New York and California have been challenged in court.
VISA/MasterCard Class Action
Visa and MasterCard have been fighting a class action lawsuit by large merchants for years, beginning with the 2005 complaint that Visa and MasterCard conspired to fix merchant fees. At the end of 2013 the financial networks agreed to a multi-billion dollar settlement with retailers, but many members of the original class opted out of the settlement and filed their own lawsuits. In 2016, a federal appeals court rejected the $5.7 billion settlement of claims that the firms improperly fixed credit-card swipe fees, potentially renewing years of litigation with millions of U.S. merchants. Campus professionals should monitor updates that could further impact payment strategy in Higher Education.