17 States Advancing Bills To Allow Payments for Taxes, Fees by Credit

A flurry of state legislative activity this year is good news for credit card users and issuers.

Consumers in 17 states may soon be able use their credit cards to pay for state or local fees, fines, taxes, and services.

In its State Legislative Update newsletter, MasterCard International reported that so far 46 bills have been introduced this year to permit government agencies to accept credit cards. Last year 51 bills were filed, 15 of them were carried over to 1995, and nine of them were enacted.

The New York-based association expects 1995 to surpass last year in terms of new legislation.

Charlotte Rush, vice president of public affairs for MasterCard, attributes the greater interest this year to the fact that many states are in the first year of their legislative cycles, when most new legislation is introduced.

Such bills have been enacted this year in North Dakota, Virginia, and Arizona, while Minnesota, Louisiana, New York, Pennsylvania, California, and Hawaii are on their way to advancing similar legislation.

Also, it appears that card processing fees have become a less controversial issue for legislators. The bank card associations' bylaws prohibit assessing consumers an additional charge for using a credit card as payment.

There is evidence that lawmakers are exploring various ways to absorb such fees without passing along the surcharge to consumers.

About 16 of the 46 bills introduced this year propose increasing the price of state charges associated with, for example, courts and motor vehicles.

This may rile some consumers on grounds that people who pay in cash would be subsidizing people who pay by credit card.

Nevertheless, 22 of the 46 bills do not address the issue of processing fees, and eight call for the fee to be directly transferred to the credit card user.

MasterCard, however, said that it has no plans to amend its bylaw to accommodate such legislation.

North Dakota, it seems, has enacted the broadest legislation, in part because it is the only state owning a financial institution, the Bank of North Dakota.

The bank will act as a clearing house and absorb the processing fee for all transactions involving credit cards. The new law permits all state agencies of North Dakota to accept credit cards.

Virginia's law essentially calls for increasing state charges to cover the expense of card processing fees, whereas Arizona's law stipulates that the state will pay the fees.

Even debit card acceptance is making some headway. The state legislatures of Georgia, New York, and North Dakota allow residents to pay state taxes with either debit or credit cards. New York allows counties and municipalities to accept both forms of payment for any debt.

Ms. Rush expects more states to be interested in legislation allowing credit card acceptance, as there is increasing pressure for state governments to improve their cash flow.

The associations maintain that federal and state governments can reduce their costs by accepting credit cards, because such expenses as bad-check fees, pilferage, and armored car rentals are eliminated.

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