Credit/debit card payments are very costly to accept (see Interchange section). On average, it costs the State $1.60 in processing fees for a $100 credit/debit card payment, and only $.33 for a paper check payment. Credit/debit card fees are high because of 1) the nature of the real-time, guaranteed payment process; 2) the cost of fraud in the industry; and 3) the increasing use of rewards-cards. Visa/MasterCard charge higher interchange fees to merchants for processing these cards, so that the card issuers can in-turn provide the cardholder with "rewards".
There is labor savings to an agency when payments are moved from a point of sale location to an automated payment channel (i.e. paper lockbox or electronic lockbox - aka epayments). However, if the agencies absorb all of the credit/debit card fees, the savings will be lost.
In addition, e-check transactions (internet-initiated ACH debits) are not subject to the high credit/debit card processing fees.
For a summary of current convenience fee rules please see Convenience Fee Rules Summary
Statewide Convenience Fee Policies
State agencies must minimize the convenience fees charged to the Payer in all circumstances. Unless otherwise authorized by law, agencies may only include the amount of the credit-debit card processing fees (i.e. interchange and association fees) as the convenience fee. All convenience fees must be approved by the State Controller's Office.
Agencies must never violate the convenience fee rules established by the card brands (see link above).
Under Section 20.905(1), Wisconsin Statutes, the Depository Selection Board determines how credit and debit card fees are to be paid. The DSB has issued this policy:
State agencies may elect to pass credit and debit card processing fees on to their customers as an addition to the total amount due, or pay the fees from their appropriations. In either case, the amount of the gross revenues must be recorded within a state appropriation.
If an agency elects to add the credit/debit card processing fees to the payment amount as a convenience fee, they must also provide e-checks as a free online payment method.
Additional questions about convenience fees should be directed to the State Controller's Office.