Use Convenience Fees

General

Because it costs money to process a bank card or ACH transaction, payments with these methods bring in less revenue than they would have with cash. In many regions, the law and contracts with card companies forbid charging any kind of direct a fee for using different payment types. A legal and widely-used alternative is a convenience or service fee, being an optional fee that can be charged to borrowers to indirectly make up the revenue lost from processing their transaction. This setting can be configured in the Loan Defaults.

While convenience fees are generally aboveboard, some governments have enacted laws limiting their use, or requiring you to disclose these fees up front. We of course want all of our clients on the right side of the law, so you may want to consult your legal team on this subject.

Options

You have four options to choose from that will determine the amount of your convenience fee. You can charge a flat dollar amount, a percentage of the amount being paid, the lesser of a flat dollar amount or a percentage of the amount being paid, or the greater of a flat dollar amount or a percentage of the amount being paid. State and federal laws may govern the maximum amount you can charge and the type of fee you can charge.

To fall within legal guidelines, convenience fees should only be added to alternative payment methods that are outside the typical payment methods offered by the lender. This means that if you charge a convenience fee, there should be payment options available to the borrower that don’t have a convenience fee associated with them.

In Practice

You can set defaults for the convenience fee by navigating to Settings > Defaults > New Loan > Loan Type Specific then specify the loan type for which you would like to set the default and select the edit button in the top right. Once you are editing the defaults, go to the Loan Settings section.

When you're satisfied with the changes, click the save button in the top right.

You may also update convenience fee defaults by navigating to Settings > Defaults > New Loan > User Group Defaults.

If a user has a User Group Default assigned, those defaults will override Loan Type Specific defaults when they are creating a loan.

Inside of a Loan

To update the convenience fee settings for a specific account navigate inside of the account to Loan Settings > Settings > EDIT.

You also have the option to change the convenience fee while making a payment on an account.

To waive the convenience fee, select the Waive Convenience Fee option in the Payment Profile Information tab.

Automatic Payment Service Fee

You may select to charge a convenience fee with each AutoPay that is ran on an account. To accomplish this, set the Service Fee setting to "Yes, Charge Convenience Fee" while setting up the AutoPay. This setting can be found in the Advanced Options of the AutoPay setup.

If this setting is set to yes, when the AutoPay is processed it will automatically be processed with the calculated convenience fee amount added to the payment amount, and a convenience fee will automatically be logged on the account for the correct amount.

To adjust the default Service Fee setting for AutoPays, navigate to Settings > Defaults > Tools > AutoPay Defaults.

Online Payment Service Fee

You may choose to specifically charge service fees for payments made online. To turn on online payment service fees navigate to Settings > Website > Access Settings > Loan Access > GENERAL, then set "Charge Online Payment Fee to Customers" to enabled. 

This will cause a service fee to be charged with every online payment made by customers. The payment will be automatically adjusted to the correct amount to cover the service fee being charged. However, if the service fee for a customer account has been set to a static amount of zero, no service fee will be charged with online payments made for that account.

Automatic payments set up by customers online will use the default AutoPay setting for Service Fee. This means that if the "Charge Online Payment Fee to Customers" setting shown above has been disabled, service fees may still be charged for AutoPays that have been setup online if the AutoPay Service Fee default setting is yes. As previously mentioned, to adjust the default Service Fee setting for AutoPays navigate to Settings > Defaults > Tools > AutoPay Defaults.

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