In the world of online transactions, credit card payments have become increasingly common. Allowing credit cards simplifies payments, automates manual bookkeeping tasks and virtually eliminate the hassle of A/R collection. However, with this convenience comes processing fees.
Traditionally, the notion of passing fees onto customers, termed "surcharge fees," has been subject to stringent regulations and legal complexities. While tempting, implementing surcharge fees demands adherence to specific rules to avoid potential penalties and maintain compliance.
To help navigate these complications, Novi offers a compliant alternative. If you're using Stripe or QuickBooks Payments, you can request that members voluntarily cover the transaction fee during online checkout.
However, if you're using Novi Pay, there is an exception: because Novi Pay can distinguish between debit and credit card transactions, it allows you to make the fee mandatory while still staying compliant.
Organizations have the options to:
Charge the fee by default, allowing users to opt out of paying it.
Do not charge the fee by default, allowing users to opt in.
Refund the fee on a cancellation
Make it Mandatory (only if using Novi Pay)
Before diving into the specifics, review an example of
the fee in action below.
In the screenshot below, a user is checking out on the frontend website for an Ecommerce item that costs $8,000.
After choosing to pay using a Credit/Debit card, the system displays the option to pay the additional amount towards the credit card processing fee to help cover costs for the organization.
Based on the fee settings, the amount is being calculated as $320.
The user can also see a description of why this amount is listed along with the option to opt in for the fee.
**If mandatory, there will not be a check box to opt out or opt in.
In this article:
Credit Card Convenience Fee Overview & Setup
To offset credit card fees, Novi gives organizations the option to use the "Credit Card Convenience" feature to suggest a fixed amount during checkouts for credit card payments. This functionality allows users to either opt-in or opt-out of paying the fee, or makes it mandatory for those using Novi Pay.
Admins can access the fee setup options by navigating to Association Settings > Payment Processing tab > Credit Card Convenience Fees section and can check the box to Enable Convenience Fees. As shown in the screenshot below, once the box is checked, additional fields will appear to complete the setup.
Fee Type
Choose whether credit card fees are opt-in or opt-out. For Novi Pay users, choose to make credit card fees mandatory.
Options:
Do not charge by default. Allow users to opt-in.
Charge by default. Allow users to opt-out.
Mandatory
Fee Label
Required
This label will show during checkout if the selected payment method is Credit/Debit Card.
Fee Description
Optional, but highly recommended*
*This is an organization's opportunity to explain what this fee is for, and why it matters. Most times this is optional, so this is the moment to "sell it" (and to also help users avoid confusion about what it covers)!
The purpose of this field is to provide users with more information about the fee request. Text added in this field will be displayed in users' cart.
Example: "Please consider donating the estimated fees for your transaction to help minimize costs for our association."
Default Suggested Amount
Required
This is the suggested amount of the fee, which will be a percentage of the total due. The minimum is 1% up to a maximum of 5%.
The specific values to choose from are:
1 %
2 %
3 %
4 % [Default]
5 %
Charge By
Required
The options to choose from are:
Do not charge by default. Allow users to opt-in.
Charge by default. Allow users to opt-out. [Default]
Mandatory (Novi Pay users only)
Fee Item
Required
Map the fee to a QuickBooks Item.
Click in the drop-down to choose from the list of all the "Products & Services" in QuickBooks Online. It is recommended to consult a bookkeeper/accountant for this field.
Fee Class
Optional
Map the fee to a QuickBooks Class if applicable.
Click in the drop-down to choose from the list of all the classes in QuickBooks Online. It is recommended to consult a bookkeeper/accountant for this field.
Fee Line Item Description
Optional
This text will display on the financial transaction.
Example: "Credit Card Fees"
Manage Fee Schedule
Check the boxes that the fee field should appear on checkout transaction types
Credit Card Convenience Fee User Experience
The experience when paying by credit card will be slightly different depending on which option is setup in Association Settings for the "Charge By" setting.
Option A: Opt-In
Do not charge by default. Allow users to opt-in.
The opt-in option gives users the option to check the box to pay the fee.
Option B: Opt-Out
Charge by default. Allow users to opt-out.
The opt-out option requires users who do not wish to pay the fee to uncheck the box to remove the amount from their total due (which is the default).
Option C: Mandatory - (Novi Pay users only)
Mandatory charge. Does not allow users to opt-out.
The mandatory option is only available if using Novi Pay. This enforces users to pay the transaction fee and it is added to the total amount due.
User Experience when Paying with a Credit Card
If the fee is enabled, users on the frontend and admins on the backend will see the option for credit card payments.
**Admins on the backend will have the option to remove a mandatory fee.
There will be a checkbox in the Payment section of the cart, including the Label, the Amount, and the Description of the Convenience Fee. For mandatory fees, the checkbox will not be present. (see screenshot below)
When setup for opt-in: By default the box will be unchecked, excluding the fee from the total.
When setup for opt-out: By default the checkbox is checked, and the fee will be included in the total.
When setup for mandatory: A checkbox will not be visible to opt-in or opt-out , and the fee will be included in the total.
Users can opt-in or opt-out by checking or unchecking the box, respectively. A checked box adds the fee to the total.
The amount of the fee is displayed alongside the "Fee Label" even when the box is unchecked.
The suggested amount is fixed and not editable in the cart.
Examples of Option A (Opt-In)
In the screenshots below:
The fee checkbox is unchecked by default.
If the user chooses to check the box, the fee amount is added to the total.
FRONTEND Example of Option A (Opt-In): |
BACKEND Example of Option A (Opt-In): |
Examples of Option B (Opt-Out)
In the screenshots below:
The fee checkbox is checked by default.
If the user unchecks the box, the fee amount is removed from the total.
FRONTEND Example of Option B (Opt-Out): |
BACKEND Example of Option B (Opt-Out): |
Examples of Option C (Mandatory)
In the screenshots below:
Novi Pay is the payment processor
The fee label will appear and will not be able to be removed (except by admins on the backend when necessary)
FRONTEND Example of Option C (Mandatory): |
Backend Example of Option C (Mandatory): |
Credit Card Convenience Fee Transactions
Credit card payment at time of purchase = one transaction
Credit card payment on an invoice = multiple transactions
Scenario 1: Credit Card Payment at Time of Purchase
When a user completes the checkout process and they select the "Credit/Debit" option, a Sales Receipt is generated in their account. If users opt-in to the fee or it is mandatory, this extra line item will be included on the Sales Receipt.
Scenario 2: Credit Card Payment on an Invoice
When users pay an outstanding invoice with a credit card, there is a distinction in processing the transaction:
Similar to Scenario 1 above, users encounter a checkbox in the Payment section, where they can opt-in or opt-out by checking or unchecking the box, respectively, or no checkbox if the fee is mandatory.
However, in the case of paying an invoice with a credit card:
Upon opting to include the fee and completing the checkout, the system will generate a separate invoice to account for the convenience fee amount. The Transaction Type for this invoice will be labeled as "Convenience Fee Invoice" in Novi.
The single credit card payment will then be applied to the invoices, bringing the balance to zero.
This dual invoice approach ensures accurate accounting for the convenience fee. Learn more about why a second invoice is created below.
Why does the system create a second invoice for the convenience fees while paying an invoice?
Payments may be made on invoices for which books have been closed or for which the accounting period has ended. In order to account for a member opting in to credit card fees (or the fees being mandatory), creating a new invoice dated with the payment date (and therefore the fee date) is logged.
By generating a new invoice specifically for the convenience fee, the transaction is accurately reflected in current financial records, ensuring compliance and avoiding potential discrepancies. Additionally, this approach allows for a single credit card charge, simplifying payment processing for both the user and the organization.
Filter By "Convenience Fee Invoice" Transaction Type
As described above, any time a user opts-in to pay the fee or are required to pay the fee while using a credit card to make payment on an invoice (or possibly multiple invoices), the system will create an additional invoice to account for the convenience fee line item.
This new invoice will be labeled with a Transaction Type of "Convenience Fee Invoice" so it can be filtered in the Transactions List View.
Cancel Event Registration or Order With A Convenience Fee
You have the option to include the credit card convenience fee when canceling an event registration or product order. By default, it is toggled on.
Important note:
The refund/credit convenience fee option will show the full fee amount on your FIRST cancellation. For example, if you have an event registration with 3 people, and you refund 1 of them, you will see the full convenience fee amount.
Once refunded, if you attempt to refund the 2nd or 3rd person, you will no longer see the option. The same applies to an event registration with a product add-on, where you attempt to refund the event registration, then the product order, or vice versa.
However - the one caveat to this is if the transaction connected to the registration or order was an invoice that was paid along with several other invoices with the same payment.
In this case, the full convenience fee amount is calculated based on the total of the payment and not this specific invoice, so we can't follow the same pattern described above (otherwise, you'd possibly end up refunding a convenience fee amount much larger than the actual transaction you're refunding).
Therefore, in this scenario we calculate the portion of the convenience fee dedicated to the specific transaction you're refunding.
