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California wants to allow credit cards at the DMV, but it'll cost you a fee

Agency wants to pass on transaction costs to drivers, switch expected by October

Got a driver's license to renew or a vehicle to register? Well, if you were planning to pay for it with a credit card, you may want to do it this summer.

Under the new state budget, the Department of Motor Vehicles will be making an administrative change to pass credit card fees on to customers, a practice that typically adds 2% or 3% to the cost of a transaction. The switch, expected by October, means drivers will pick up $45.3 million a year in transaction fees currently absorbed by the department.

That cost is expected to grow to $71.8 million a year once the DMV adds field offices and expands self-service terminals. In a state with 27.1 million drivers, that works out to about $2.65 per driver.

DMV spokesman Jaime Garza confirms the change will be happening but says there's not a set date for the switch. Plus, it's unclear how much the fee will be.

"There are some technical requirements that are necessary to implement this process," Garza wrote in an email. "We will be communicating with the public after we have determined a date for the passing of the fee."

When Gavin Newsom released his goals at the beginning of the year, the new governor set his sights on improving the DMV. Newsom said he wanted to bring the department into the 21st century and singled out the DMV's inability to accept credit cards in the year 2019.

"You can't make that up," Newsom said during the release of his budget in January.

The switch is the result of a performance audit that looked for ways to improve operations and customer service. For years, the DMV has not charged a fee when customers use Visa, MasterCard, American Express or Discover to make online payments or at self-serve DMV Now kiosks.

But as the administration pushes the DMV to embrace technology and battle long wait times, it means adding the capacity to process credit cards at 172 offices — and passing the fees to customers.

While it may be cold comfort to consumers watching each penny, Department of Finance spokesman H.D. Palmer said it's common for government entities to pass transaction fees to consumers. A number of other state agencies such as the Franchise Tax Board, Department of Transportation and the Department of Consumer Affairs already charge credit card processing fees.

Of course, you can always avoid the fee by paying with cash, check, money order or debit card.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California's policies and politics. Read more state news from CALmatters here.

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Comments

17 people like this
Posted by Nayeli
a resident of Midtown
on Jul 13, 2019 at 11:48 am

Nayeli is a registered user.

I thought that the charge was already fixed within the cost of the DMV fees anyway. After all, our fees are already the highest in the nation.


13 people like this
Posted by resident
a resident of Downtown North
on Jul 13, 2019 at 12:04 pm

Question: when the DMV pays the credit card companies a 3% fee, how much of that is a real expense to the credit card companies and how much is a pure profit that they make because of price fixing? There are only 2 main credit card companies (Visa and MasterCard) so there is little incentive for them to compete on fees.


2 people like this
Posted by rsmithjr
a resident of Duveneck/St. Francis
on Jul 13, 2019 at 1:52 pm

rsmithjr is a registered user.

Questions:

1. Will the DMV still accept other forms of payment, e.g., cash?
2. How will they account for the costs and inefficiencies of dealing with cash?

I have a general practice of paying with cash when fees are required for credit cards and see no reason for making an exception.


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