Kansas Town Signals Move for Municipal Credit Card Convenience Fees
January 4, 2010
By: Joe Taylor Jr.
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Officials in Hutchinson, Kansas have started charging convenience fees when collecting payments for city services by credit card. State lawmakers exempted cities like Hutchinson from a ban on charging credit card users for the privilege of paying bills with plastic. Banking industry analysts expect the practice to become more widespread as other municipalities relax restrictions on credit card fees.
Although most credit card processors restrict merchants from requiring surcharges on routine transactions. However, many merchant agreements set guidelines for separate convenience fees when a credit card transaction is offered as an alternative to a standard business practice. Therefore, public agencies that accept cash or check payments in person may charge convenience fees when offering online or telephone payment options.
Many states still restrict local municipalities' ability to charge convenience fees on credit card transactions, regardless of the terms of their merchant processing agreements. With many state legislatures looking to close budget gaps, convenience fees offer an attractive opportunity to increase revenue without raising taxes.
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