This question has been a debate for the last couple of days in my morning class. some Yeshiva’s charge an extra 3% for credit card transactions for paying tuition and some do not. Is it considered interest? They are claiming that they get charged processing fees that they should not have to pay and they are passing that expense along to the parent. There is a transaction fee for every transaction and furthermore their credit card machine usually comes with a monthly rental fee which they agreed to with the credit card company when they open the account. are they allowed to pass on this expense to the parents who pay the tuition?
The same question applies to a business transaction where I do a service for somebody and they pay me. Am I allowed to charge the extra percentage for the work?
They are different entities one is a school one is a business but both have accepted upon themselves to accept credit cards.
A person lending someone else money is allowed to charge the borrower for the expenses that were incurred due to the loan. What has to be verified here is if the 3% is indeed what the school is paying for credit-related expenses or if this amount is above their expenses. The fact that the business or institution has accepted the charge upon themselves is not relevant here, if it is an expense they have because of the loan, then it isn’t for the extension of time that their money was held, which would be ribbis, rather because of expenses they had in giving the loan.
Regarding the service that you provided, you are charging a fee for that. You can’t charge more because they are paying you later. Then it is a charging for the loan.
Bris Yehuda 9 1-8