Nevada paid $6.76 million in credit card fees in fiscal 2014

The state of Nevada spent $6.77 million last year paying fees for people and companies who use credit cards to pay bills like registering a car.

The credit card companies impose fees on the “merchant” who accepts a card for a purchase. The fees range from less than a percent to 2 percent of the transaction.

But credit and debit card companies all insist the merchants — including public entities like state government — not charge the customer for the fee because making credit and debit cards more expensive would discourage the use of the cards.

Since those fees aren’t included in the price of a car registration or such things as business licenses purchased from the Secretary of State’s office, the fees are typically funded by supplemental budget requests processed by the Legislature or the Interim Finance Committee.

Just last week, the money committees of the Nevada Legislature heard a supplemental request for more than $375,000 — much of it credit card fees — from the Nevada Department of Motor Vehicles.

The DMV is far and away the biggest agency relying on credit card payments. In Fiscal 2014, DMV paid credit card companies $4.64 million.

The next largest user is the Secretary of State, which collects a variety of business license and other commercial fees from corporations and other entities. Their total fees paid for that year were $1.96 million.

Mike Willden, chief of staff to Gov. Brian Sandoval, said Friday he doesn’t know what the administration’s position is going to be but it’s looking at the issue.

Director of Administration Jim Wells said if the governor decides to do something to change the current rules, it should be “a global solution,” not something just tailored to one agency. He said given the card company rules, the answer might be more complicated than it would appear.

A report pulled by the controller’s office, for the Nevada Appeal, from the state’s accounting system lists a total of 22 state agencies that paid credit card fees during fiscal 2014, the most recent complete year for which data was available. The total fees listed on that report are $6,759,445.88.

But, despite the rules imposed by credit card companies, there are ways the state could save that money and the governor’s office and his budget office are beginning to look into the issue based on the idea the people and businesses that benefit from the service of being able to use plastic to pay should foot the bill, not the taxpayers of the state as a whole.

DMV Director Troy Dillard said, however, discouraging people from using credit and debit cards is not the way to go. He said the harder DMV makes it to pay for such things as registration renewals electronically, the more likely that customer is to physically come in to a DMV office. He said that’s less efficient, takes up staff time and ends up costing the state more.

There also is the fact when a card is used for payment, there’s almost never an issue with the state actually collecting the money as opposed to checks that, in some cases, bounce.

While credit companies frown on raising prices to include fees, some states have managed to craft a so-called “convenience fee” to cover the cost. The idea being the individual is paying for the convenience of using a card instead of paying some other way.

Another tactic is to provide a discount for using cash instead of a card, effectively allowing the higher card fee to cover the fees. Surprisingly in 2015, Dillard said up to 30 percent of DMV customers still pay in cash.

In the past, one state agency — Wildlife — did charge a fee for using a card to purchase a hunting or fishing license. The agency stopped after being told by its deputy attorney general the fee was almost certainly illegal.

Most of the other agencies reporting significant amounts of credit and debit card fees were the logical ones that deal with customers such as the parks division and state museums which reported fee payments of $17,052 and $8,568 respectively.

Gaming Control reported paying $28,110 for the year, likely because of card payments for quarterly and annual licenses.

In addition, the Judicial branch reported $2,614 in fees — logically sales of library and legal materials. The Legislative Counsel Bureau reported fees totaling $22,253 including sales of Nevada Revised Statutes, lobbyist fees and sales from the legislative gift shop.