On the scale of practices that bother consumers, credit card surcharges fall somewhere between mildly annoying and utterly offensive.
And they’re legal, as long as businesses stay within the parameters of the law.
But one driver’s recent experience renewing two car registrations online with the Motor Vehicle Commission (MVC) is making the experience better for all consumers.
We’re talking about more than 4.5 million transactions in 2023 alone, according to MVC data obtained by NJ Advance Media under an Open Public Records Act (OPRA) request just before the state Legislature took up new efforts to gut the law that allows the public — including journalists — to request public records.
Back on point. Even with 4.5 million transactions in just one year, sure, we’re taking about pennies when you see it one transaction at a time. But per year, it adds up to more than $4 million spent by the state’s drivers on the fees. More on that in a moment.
First, let’s review the credit card surcharge law.
Higher business costs during the COVID-19 pandemic led many merchants to start passing on their cost for credit card processing, which can be as high as 3% or 3.5% of a purchase, to consumers.
The practice, while legal in the state, came under fire as consumers faced their own inflationary pressures.
In response to queries by NJ Advance Media, the state enacted a law that banned companies from making a profit off of the fees. Merchants were no longer permitted to charge consumers more than the businesses pay to credit card processors. It also clarified what disclosure was required before charging the fee. All businesses must post the charges, but the new law specified that restaurants must have the notification “in the customer entry area or on a printed menu.”
Online transactions, too, are subject to the law. It says sellers must “provide clear and conspicuous electronic notice of the surcharge on the checkout page of that website, mobile application, or electronic kiosk.”
Online disclosure is what ticked off our reader when he went to the MVC website to renew two registrations.
BEHIND THE SURCHARGE
Consumers say doing business with the Motor Vehicle Commission, which once had a meme-worthy reputation, is pretty easy in most cases. That’s certainly true of the online renewal process.
Our reader, who asked to remain anonymous to protect his privacy, said the online renewals were indeed easy, but when it came time to pay, he was surprised to see a credit card surcharge. He said he expected it would have been disclosed sooner in the process.
“The fees I paid were $2.39 on top of an $82 charge and $2.10 on a $69.50 charge. The first one is 2.9%, the second one is 3%. Why aren’t they the same percentage?” he asked, sharing screen shots of his receipts.
The reader also noted that when he pays his property taxes online through his town, it offers either a credit card option with a surcharge or an ACH transaction — when money is taken directly out of a bank account — for a smaller fee, typically 1.5%.
“The lack of disclosure is still wrong,” the reader said.
It may feel wrong, but the disclosure provided by MVC falls within the law.
We still had questions, so we asked MVC why the disclosure didn’t come sooner, why there isn’t an ACH option and how much is actually being charged to process the credit cards.
Because timing is everything, our personal driver’s license renewal notification came to our mailbox the very same day. So we went through the process.
It cost $24 for the renewal and $1.05 for the service fee, which came to a whopping 4.3%. There was no ACH option offered and no disclosure about the fee until the end of the process.
Then MVC explained exactly why consumers may see different amounts for different kinds of transactions.
“The fee for all card types per transaction is 2.3% plus 50 cents,” spokesman William Connolly said.
Connolly emphasized the fee is for credit card processing and not for some kind of MVC surcharge. He said it’s “clearly displayed on the checkout page on the MVC website and before any transaction is processed, as required by law.”
And that’s correct. But then Connolly added some good news about disclosure for consumers.
“While the credit card fee for online services is noted on our website, we will add more specific details about it to the site,” he said.
Several weeks later, the changes were starting, Connolly said.
“We have updated our online services page with additional details about the service fee,” he said. “The individual initial transaction pages are still being updated and will include the same language as the online services page.”
The clarity will be a good service to consumers.
In 2023, 3.559 million registrations were renewed online and more than 867,000 drivers licenses were renewed online, the state said as part of our OPRA request.
While MVC didn’t address why there is no ACH option, it said consumers still have payment choices.
“For customers who do not wish to pay a credit card service fee for online services, they can continue to mail in a check to MVC for their transaction or process a transaction in person at an agency,” Connolly said.
We’re grateful the agency is reviewing the disclosure so there are no last-minute surprises at the end of a transaction.
If you believe a business is not following the disclosure law, you can file an online complaint with the Division of Consumer Affairs on its website or by calling (800) 242-5846.
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Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on X at @KPMueller.
