Convenience Fees vs Dual Pricing: Which Payment Model is Right for Your Business?

If you’re looking to reduce or eliminate credit card processing costs, you’ve probably heard about convenience fees and dual pricing. Both can help offset processing expenses, but they work in very different ways—and choosing the wrong one can create customer frustration or compliance issues.

Let’s break down how these two payment models work, when to use each one, and which might be the better fit for your business.

What Are Convenience Fees?

A convenience fee is a flat dollar amount charged when customers use an alternative payment channel rather than your standard payment method.

The key word here is alternative. If you normally accept payments in person, but you add online or phone payment options, you can charge a convenience fee for those alternative channels. The fee compensates you for offering the convenience of paying through a method that’s not your standard practice.

Example: A city hall that accepts utility payments in person at their office adds an online payment portal. They can charge a $2.95 convenience fee for customers who choose to pay online rather than visiting in person.

Convenience Fee Requirements

Card brands have specific rules for convenience fees:

• Must be a flat dollar amount (like $3.50), not a percentage
• Must provide genuine convenience through an alternative channel
• Must be clearly disclosed before the transaction
• Must apply equally to all card types used in that channel
• The alternative channel cannot be your primary payment method

What Is Dual Pricing?

Dual pricing displays two prices before customers complete their purchase—a card price that includes processing fees and a cash/ACH price without those fees.

Customers see both options upfront and choose which payment method they prefer. The card price is typically 3-4% higher than the cash price, reflecting the cost of card processing.

Example: A retail store displays items with two prices—$104 for card payments or $100 for cash/ACH. Customers paying with cash or ACH automatically receive the 4% discount.

Dual Pricing Characteristics

Dual pricing offers several advantages:

• Works across all payment channels—in-store, online, phone
• Legal in all 50 states with no geographic restrictions
• Applies to all card types—credit, debit, and prepaid
• Shows both prices with equal prominence
• No card brand registration required

Key Differences: Side by Side

When to Choose Convenience Fees

Convenience fees make sense when:

You’re Adding an Alternative Channel If in-person is your standard method and you’re adding online or phone payments, convenience fees are a natural fit. Customers understand they’re paying for the convenience of not having to visit your location.

You Want a Simple, Predictable Fee Flat fees are easier for customers to understand. Whether someone pays $50 or $500, the convenience fee stays the same.

The Alternative Channel Has Higher Costs Online and phone payments often have different processing structures. A convenience fee helps offset these specific costs without changing your in-person pricing.

Your Business Model Fits Convenience fees work well for theaters selling tickets online, government agencies accepting online payments, utilities offering phone payments, or service providers adding digital payment options.

Convenience Fee Limitations

Convenience fees won’t work if:

• Online or phone is your primary payment method
• You want percentage-based pricing
• You need to reduce costs across all channels
• You can’t clearly demonstrate genuine convenience

When to Choose Dual Pricing

Dual pricing makes sense when:

You Want to Eliminate Processing Costs Everywhere Dual pricing works across all payment channels—in-store, online, mobile, and phone. If you’re processing significant card volume in any channel, dual pricing can dramatically reduce or eliminate those costs.

You Need Geographic Flexibility Dual pricing is legal in all 50 states. If you operate in multiple states, including California, Connecticut, Maine, Massachusetts, or Puerto Rico (where surcharging is prohibited), dual pricing gives you a nationwide solution.

You Want Better Customer Acceptance Dual pricing frames the conversation around choice and savings rather than adding fees. Customers feel empowered to choose their payment method. Many businesses report smoother customer acceptance with dual pricing compared to other fee-based programs.

You Process High Card Volumes The more credit card processing you do, the more you save with dual pricing. A business processing $50,000 monthly in card payments at 2.5% effective rate pays about $1,250 in fees. Dual pricing can eliminate most or all of that cost—saving over $12,000 annually.

Dual Pricing Advantages

Dual pricing offers:

• Consistent pricing structure across all channels
• Simpler compliance (no registration required)
• Better customer perception (choice vs. penalty)
• Higher potential savings for high-volume businesses
• Flexibility to apply to all card types

Real-World Scenarios

Scenario 1: Auto Repair Shop A repair shop primarily accepts payment when customers pick up their vehicles. They want to add online payment so customers can pay their invoice before arriving.

Best Choice: Convenience fees. They have a clear standard method (in-person at pickup) and are adding an alternative channel that provides genuine convenience. A $3.95 flat fee for online payments is simple and justifiable.

Scenario 2: Restaurant A restaurant accepts payments both in-person and online for takeout orders. They want to reduce processing costs across both channels.

Best Choice: Dual pricing. Since they accept cards as a primary method in both channels, they can’t use convenience fees. Dual pricing lets them display both prices on menus and online, giving customers the choice while eliminating processing costs.

Scenario 3: Professional Services Firm A law firm accepts payments in-person, by mail, online, and by phone. They want a comprehensive solution to offset processing costs.

Best Choice: Dual pricing. With multiple payment channels all actively used, dual pricing provides one consistent approach across everything. Clients see card and cash prices regardless of how they pay.

Scenario 4: Utility Company A utility company accepts payments at their office but wants to add online and phone options to reduce in-person traffic.

Best Choice: Convenience fees. Clear standard method (in-person at office) with alternative channels providing genuine convenience. Many utility customers expect and accept convenience fees for online/phone payments.

Customer Communication Matters

Whichever model you choose, clear communication is essential.

For Convenience Fees:

• Display the fee amount before customers complete payment
• Explain what convenience is being provided
• Be consistent in how you communicate the fee
• Train staff to explain the alternative channel benefit

For Dual Pricing:

• Display both prices with equal prominence
• Use clear signage at entrances and points of sale
• Train staff to explain the choice: “We offer two prices—pay with card at the posted price, or save [X]% paying with cash or ACH”
• Frame it as offering options, not adding fees

Making Your Decision

Ask yourself these questions:

1. What’s my primary payment method? If you have a clear primary method and are adding alternatives, convenience fees might fit. If cards are accepted everywhere, dual pricing is likely better.
2. Which channels do I use? If you’re focused on one alternative channel, convenience fees work. If you want savings across all channels, choose dual pricing.
3. What’s my transaction volume? Higher card processing volume means greater savings potential with dual pricing’s percentage-based approach.
4. How do my customers pay? If most customers already use cards, dual pricing gives them choices. If you’re just starting to accept electronic payments, convenience fees for alternative channels make sense.
5. What do my competitors do? If competitors use fee-based programs, customers are more likely to accept them. Check your competitive landscape.
6. Where do I operate? Both work nationwide, but dual pricing is particularly valuable if you operate in multiple states since it has no restrictions.

Implementation and Support

Both convenience fees and dual pricing require proper setup to ensure compliance with card brand rules. IntelliPay handles:

• Technical configuration of your payment system
• Proper customer disclosure setup
• Staff training on how each program works
• Ongoing compliance monitoring
• Support as your business evolves

Most businesses implement either program within 2-4 weeks and start seeing cost savings immediately.

The Bottom Line

Choose convenience fees if you have a standard payment method and are adding an alternative channel that provides genuine convenience. They’re simple, straightforward, and work well for specific situations.

Choose dual pricing if you want to reduce or eliminate processing costs across all payment channels while giving customers transparent choices. It offers broader application, better geographic flexibility, and typically higher savings for businesses processing significant card volume.

Not sure which fits your business? That’s exactly what we’re here for.

Next Steps

Schedule a free consultation with IntelliPay’s payment experts. We’ll:

• Review your current payment processing (if applicable)
• Analyze your transaction volumes and channels
• Discuss your customer base and business model
• Show you potential savings with each option
• Recommend the best solution for your specific situation
• Answer all your questions

Call 855-872-6632 or email sales@intellipay.com today.

Let’s find the right payment model to reduce your costs and give your customers the payment options they want.

About IntelliPay

IntelliPay is a PCI DSS Level 1 certified payment processor trusted by thousands of businesses and government organizations nationwide. We deliver secure, transparent, and flexible payment solutions—from traditional processing to innovative fee-based programs like convenience fees and dual pricing. Our expert consultants help you navigate complex payment decisions and implement solutions that work for your business. Learn more at intellipay.com.