By Justin Haag, founderOctober 6, 20265 min read

Can a city, county, or school accept cards without paying fees?

Sometimes. The card networks run programs that let eligible government and education payments carry a fee paid by the cardholder. Whether your payments qualify depends on the payment type, your state, and your acquirer. Here is how the pieces fit.

Service fee, not convenience fee

Visa's U.S. rules allow "a government agency, utility Merchant, education Merchant, or its third party" to assess a service fee on eligible payments, in person and online. The eligible merchant categories are utilities (4900), schools and educational services (8211, 8220, 8244, 8249), courts and fines (9211, 9222), tax payments (9311), and government services (9399) (Visa rules, April 2026, section 5.5.3.1 and Tables 5-6 and 5-7). The fee must be disclosed to the cardholder as a service fee before the transaction completes, with the ability to cancel; it may not be represented as a fee charged by Visa; it must be a reasonable reflection of the cost of the transaction; and it cannot be stacked with a surcharge or convenience fee.

A convenience fee is a different, narrower thing: a flat fee for using an alternative payment channel such as online instead of in person, card-absent only, included in the transaction total, and not allowed on recurring payments (Visa rules, Table 5-5). Agencies sometimes use the two terms interchangeably. Their acquirers do not.

Mastercard runs a comparable government and education program. Its published program summary bars the collecting entity or its agent from advertising the fee "as an offset to the merchant discount rate" and requires acquirer registration; that document is dated 2007 and we have not verified the current Mastercard rule text, so treat it as reported.

What Arizona law adds

State agencies may charge a convenience or service fee only after submitting it to the State Treasurer for approval, and may not charge one on payments for licenses needed to pursue a trade or occupation, to operate a business, or to register a vehicle or license a driver (A.R.S. 35-142). Counties have express authority to pass card costs to the payer (A.R.S. 11-251), and courts may impose a convenience fee (A.R.S. 12-118). We found no Arizona statute that addresses cities, towns, or school districts specifically; those bodies generally act by ordinance or board action with public fee notice. The "A.R.S. 35-391.01" citation that circulates online does not exist.

The school-lunch problem

For K-12, the Consumer Financial Protection Bureau's 2024 review of payment platforms found average fees of about $2.37 per transaction or 4.4% of the payment, that only 21% of sampled districts publicly disclosed fee information, and that federal policy requires a fee-free option for school meal payments (CFPB issue spotlight). A lower, clearly disclosed parent fee is a real differentiator for a district, but only if the payment system integrates with the nutrition and student-information systems the district already runs.

What a finance office should ask

1. Which of our payment types fall in the eligible categories, and which do not?
2. Who registers the program with the networks, and who holds that registration?
3. Exactly what wording will the payer see, and can they cancel after seeing it?
4. Does state law or our own charter restrict the fee for any payment type?
5. How do fees and deposits reconcile to the general ledger by department and fund?
6. Does it integrate with the billing, permitting, court, or student systems we run today?

The last question decides most procurements. Agencies buy payment acceptance as an integration to the system they already have, not as a standalone merchant account.

General information, not legal advice. Rulebook quotations are from the Visa edition cited; Mastercard program details are from a dated summary and marked as such; Arizona statutes are linked. Confirm eligibility with your acquirer and your attorney.