By Dale Erling | Last Updated August 2026 | 7-9 minute read
IntelliPay is a PCI DSS Level 1 certified payment processor administering service fee, convenience fee, and dual pricing programs for government agencies, utilities, and educational institutions nationwide since 2004.
Quick Answer
What fee language should go into a payment processor RFP?
Name the specific fee model your agency qualifies for, service fee or convenience fee, before you ask vendors to quote a rate. Confirm your merchant category code eligibility first, require vendors to cite the exact Visa or Mastercard program their pricing falls under, and have legal counsel confirm the model is permitted under your state's statute. Skipping any of those steps is how agencies end up with vendor bids that cannot be fairly compared, or fee structures that do not hold up to audit.
Most payment processor RFPs are not written from scratch. A finance office pulls the last one, updates the dates and the department names, and sends it out. The fee section is usually the part that gets touched least, because it looks settled. The agency has been charging a "convenience fee" for years, so why revisit the wording.
That habit is where a lot of avoidable problems start. Card network rules on fee models change periodically. State statutes shift. And "convenience fee" gets used in most procurement documents as a catch-all for three genuinely different programs (service fees, convenience fees, and surcharges), each with its own eligibility rules and its own compliance obligations. If your RFP does not distinguish between them, you cannot compare vendor bids on an apples-to-apples basis, and the fee structure you end up with may not match what the card networks actually permit.
This guide is written for the person who has to draft or review that section: a treasurer, finance director, or procurement officer preparing an RFP, or reviewing one that has been sitting in a template folder for a few budget cycles. For the underlying definitions themselves, see IntelliPay's full comparison of service fees, convenience fees, and surcharges. This piece is about what to do with those definitions once you sit down to write.
Why Fee Language Breaks Down in RFPs Specifically
An RFP is a different kind of document than a vendor FAQ or a resident-facing disclosure. It has to do three things at once: define what your agency is asking for, give vendors enough structure to submit comparable bids, and hold up later as part of the contract. Loose fee terminology fails at all three.
It produces bids you cannot compare. If the RFP asks vendors to propose a "convenience fee" without specifying the model, one vendor may respond with a true Visa-compliant convenience fee, flat and tied to an alternate channel. Another may respond with a service fee proposal, which is structured completely differently and may not even require your agency's usual channel condition. Both get labeled the same thing on the proposal cover page, and your evaluation committee is left comparing numbers that were never built on the same rules.
It carries forward outdated eligibility. The clearest recent example: before October 2025, utility merchants under MCC 4900 had no access to Visa's service fee program and were limited to convenience fee structures. An RFP written in 2023 or 2024 for a utility billing system reflects that older, more restrictive reality. If nobody revisits the fee section, the agency may be soliciting bids under a model that is no longer its best available option.
It creates contract language that does not match network rules. Whatever gets written into the RFP typically carries into the resulting contract and vendor exhibit. A fee model described imprecisely at the RFP stage tends to stay imprecise all the way through implementation, which is exactly the kind of gap an audit finds.
The Three Models, Briefly
You do not need to reproduce a full compliance explainer inside your RFP, but your drafting team should know which of these three applies before writing the fee section.
| Model | Who Qualifies | Key RFP Consideration |
|---|---|---|
| Service Fee | Government, higher education, and utility (MCC 4900) merchants under specific Visa and Mastercard programs | No alternate channel requirement; can be flat or variable; confirm your department's MCC before specifying this model |
| Convenience Fee | Broader merchant categories offering an alternative payment channel | Must be flat, not a percentage; a fee-free standard channel must remain available |
| Surcharge | Point-of-sale card-acceptance cost pass-through, subject to network caps | Prohibited outright in some states; requires specific receipt and signage disclosure |
For the full eligibility tables, MCC codes, and disclosure requirements behind each model, see the service fee vs. convenience fee comparison and the 2026 guide to surcharging, dual pricing, and convenience fees.
What GFOA's Own Guidance Says About This
The Government Finance Officers Association has published best-practice guidance directly on this topic, and it is worth reading before you finalize an RFP. GFOA's material on accepting payment cards and selecting a payment card service provider recommends that governments use a competitive RFP process specifically because it forces the agency to gather the information needed to make an appropriate vendor selection, rather than defaulting to whatever the last contract specified.
GFOA's guidance also flags something worth building into your own checklist: card processing vendors can have significantly different rates and fee structures depending on the methods they use, and applicable federal, state, and local law should be reviewed before the RFP scope is finalized, not after. That sequencing matters. Legal review belongs at the drafting stage, not as a final sign-off after the fee language is already locked in.
Sample RFP Fee Section Language
Below is a starting structure you can adapt. It is written to force vendors to be specific rather than accept a generic "convenience fee" line item.
Exhibit: Fee Structure Requirements
4.1. Vendor shall identify, for each payment type and department listed in Attachment A, whether the proposed fee is structured as a service fee, convenience fee, or surcharge, and shall cite the specific card network program under which the fee is authorized (e.g., Visa's Government, Higher Education, and Utility Payment Program; Mastercard's Government/Education Convenience Fee Program).
4.2. For any proposed convenience fee, Vendor shall confirm the fee will be assessed as a flat amount and that Agency will retain at least one fee-free standard payment channel, consistent with applicable card network requirements.
4.3. For any proposed service fee, Vendor shall confirm the Merchant Category Code(s) under which Agency's departments qualify and shall describe the fee's structure, including whether it is flat, variable, or a combination.
4.4. Vendor shall describe the disclosure method by which payers will be notified of the applicable fee prior to completing a transaction, for each payment channel (in-person, online, phone, mail).
This language does not lock you into a specific vendor's product. It just requires every respondent to show their work, which is what makes the resulting bids comparable.
Five-Step Review Before the RFP Goes Out
Fee Section Review Checklist
Step 1. Search the draft for every use of "convenience fee." Flag any place it is standing in for service fee or surcharge.
Step 2. Confirm the Merchant Category Code for each department or payment type before specifying a fee model.
Step 3. Separate the fee model definition from the fee amount. Define which program applies before asking for a rate.
Step 4. Require vendors to name the specific card network program their fee falls under, not just a dollar or percentage figure.
Step 5. Route the fee section to legal counsel to confirm it holds up against your state's statute, before release.
If your agency handles multiple payment types under different MCCs, a tax office alongside a parks and recreation department, for example, it is common and often necessary to specify different fee models for different departments in the same RFP, rather than forcing one blended structure across everything you collect. IntelliPay's government payment processing page and government payment processing guide go into how that typically breaks down by department.
Drafting an RFP Right Now?
IntelliPay will review your fee section language at no charge.
We will tell you whether the fee model you have specified matches your agency's actual MCC eligibility and current card network rules, before you release the RFP.
Talk to a ConsultantFrequently Asked Questions
What fee terminology should a government RFP use for payment processing?
Name the specific fee model your agency is eligible for, service fee or convenience fee, and do not use the two terms interchangeably. Naming the wrong model produces vendor bids that cannot be fairly compared against each other.
Why does old RFP language cause problems for new procurement cycles?
Fee sections are frequently copied forward from a prior cycle with minimal review. Card network rules change periodically. Most recently in October 2025, Visa expanded service fee eligibility to utility merchants under MCC 4900. Language written before a rule change can specify a model that is now outdated.
Does GFOA have guidance on selecting a payment card processor?
Yes. GFOA recommends a competitive RFP process for selecting a payment card service provider and outlines factors agencies should evaluate, including applicable law, program scope, and fee structure. Its guidance is available at gfoa.org.
Can our agency ask for both service fee and convenience fee proposals in the same RFP?
Yes, this is common when an agency has multiple departments with different merchant category codes, a tax office and a parks and recreation department, for instance. Specify which fee model applies to which department or payment type rather than requesting one blended proposal.
What happens if our fee language does not match Visa or Mastercard's actual program rules?
A mismatch between what the RFP or resulting contract specifies and what the network actually permits creates audit exposure, and can require renegotiating with the vendor or refunding payers later. Confirming program eligibility before release avoids this.
Should legal counsel review fee language before the RFP is released?
Yes. Card network rules and state law both govern what fee models are permitted, and they do not always align. Several states limit or prohibit certain structures outright. Counsel should confirm the language is permitted under your state's statute before the RFP goes out.
Key Takeaways
Most payment processor RFPs are copied forward from a prior cycle, and the fee section is often the least-reviewed part. "Convenience fee" gets used as a catch-all for service fees, convenience fees, and surcharges, three programs with different eligibility rules, which produces vendor bids that cannot be fairly compared.
Before releasing an RFP: confirm your department's Merchant Category Code eligibility, define the fee model before asking for a rate, require vendors to cite the specific card network program behind their proposal, and have legal counsel confirm the model against your state's statute. GFOA's own guidance recommends a competitive RFP process for exactly this reason: it forces the information-gathering that a rolled-over contract skips.
IntelliPay administers service fee, convenience fee, and dual pricing programs for government, education, and utility clients, and will review fee section language in a draft RFP at no charge, before it goes out for bid.
Related Reading
Disclaimer
This article is for informational purposes only and does not constitute legal, tax, or procurement advice. Card network rules governing service fees, convenience fees, and surcharges are published by Visa and Mastercard and are subject to change. GFOA best practice guidance referenced is available at gfoa.org. State and local laws governing fee structures vary and change; agencies should consult legal counsel and their acquirer before finalizing RFP fee language or a resulting contract. Sample RFP language provided is a starting template only and should be adapted to your agency's specific procurement requirements and legal review process. Last updated: August 2026. IntelliPay is a registered ISO/MSP of Citizens Bank, Providence, RI, and Synovus Bank, Columbus, GA.
