Checkout fees – what does it mean for your utility?

Statistics for my blog indicate that the article about convenience fees continues to be the most popular. Apparently, lots of people are searching the internet to learn more about charging convenience fees.

Checkout fees now allowed

If you’ve read my newsletter or the blog post mentioned above, you know that whether or not you can charge a convenience fee is based on how you received the payment.

All that has changed. You may have seen in the news that, effective January 27, 2013, retailers can now charge “checkout fees” for Visa and MasterCard transactions. This is the result of the Interchange Settlement as a result of a class action lawsuit brought by retailers against banks and Visa and MasterCard.

I’m not an attorney, but my research leads me to believe that, in this context, a retailer is any entity that accepts credit cards, including municipalities and utility districts.

Rules for charging checkout fees

If you opt to start charging a checkout fee, you must follow some rules. These include notifying your customers of the checkout fee at your entrance, at the point of sale and on the customer’s receipt. I’ve read some advice that recommends issuing separate receipts for the purchase and the checkout fee.

Checkout fees can only be charged for credit card transactions, not debit card or prepaid cards. The checkout fee also cannot exceed what you are charged to process the credit card transaction, up to a maximum of 4%.

Ten states are ineligible

If your utility is in one of the following 10 states where check-out fees are already illegal, the Interchange Agreement didn’t accomplish anything for you. These 10 states are:

  • California
  • Colorado
  • Connecticut
  • Florida
  • Kansas
  • Maine
  • Massachusetts
  • New York
  • Oklahoma
  • Texas

However, if you are located in one of the remaining 40 states, I believe you can now charge a checkout fee for credit card transactions, regardless of how the payment is received.

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© 2013 Gary Sanders

Are you familiar with 2-4-1…?

Did you know the Postal Service adopted a policy that allows you to mail two ounces for the price of one?

Known in the trade press as “2-4-1”, the USPS 2nd Ounce Free program allows mailers to send mail pieces of up to two ounces at the one ounce rate.

The 2nd Ounce Free price only applies to First-Class Mail Presort and Automation rates. This means you must either outsource your bills or print them using CASS certification to qualify.

Communicate more information

A good utility bill should present the billing details in a clear, easy to read format. However, there are times when you want to present more information than will fit on your bill.

Newsletters, consumer confidence reports and annual budgets are all valuable information to send your customers. By taking advantage of the 2nd Ounce Free program, you can include these as inserts with your bills at no additional cost.

Promote new programs

Another great way to use this program to your benefit is periodically including promotional flyers with your bills.

Use these flyers to announce new initiatives like online bill pay or IVR phone payment systems or to remind your customers of existing programs like budget billing or bank drafts.

For more information about the 2nd Ounce Free program

If you would like more information about the 2nd Ounce Free program, the Postal Service has a fact sheet on their website.

If you have questions about designing clearly understandable utility bills or including promotional flyers with your bill, please give me a call at 919-232-2320 or e-mail me at

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© 2013 Gary Sanders