Utility company surcharges

[Uncle Leo]

Been curious what the official explanation would be concerning surcharges and how utility companies can get away with them, so I e-mailed VISA and asked. Their e-mail is: askvisausa@visa.com

 

I think I know the answer, but am curious what the official response would be. Here's my initial e-mail to them...

 

Hello,

 

I know that it is against VISA policy for a merchant to add a surcharge for using a VISA card.

 

How is it that utility companies are doing it and getting away with it?  Both my power and

telephone companies want to charge me an extra fee for paying by VISA.

 

Thanks.

 

I tried to keep it simple. No extraneous information. They responded within a few hours, which was impressive, until I read their response...

 

Thank you for contacting us.

 

To report any merchant practices that you feel are inappropriate, please notify the disputes area

at the financial institution that issued your card account. Your card issuing bank has access to

the appropriate Visa rules and regulations as well as to the Notification of Customer Complaint

forms which should be used by your bank to document and file merchant complaints. It is not necessary

for your bank to be the offending merchant's financial institution in order to file a complaint

for you.

 

As an alternative, to report merchant practices that you feel are inappropriate, you may wish to

contact the Visa Call Center Services at 1-800-VISA-911 (1-800-847-2911).

 

We hope this information proves helpful,

 

Thank you for writing,

 

Visa Webmaster

 

Obviously, they didn't address the question at all. So, I called VISA. The gentleman was willing to read the generic policy to me, but when I asked about utility companies specifically, he backed off and suggested I contact my financial institution and submit a complaint and that within 10 days I would have a written response from VISA. Basically, he didn't know and didn't want to be bothered with it.

 

I then visited my power company's web site and found the following in their FAQ area concerning credit card payments...

 

Frequently asked questions about SpeedPay

 

Q. Why is there a $5.95 fee added to my Alliant Energy payment?

 

A. The $5.95 convenience fee is the amount Speedpay, Inc., charges to cover processing fees and transaction costs associated with handling credit card and electronic debit payments.

 

Q. I usually don’t pay other vendors a separate fee when I use my credit card. Why should I have to pay it now?

 

A. Other companies are able to add the price of processing these requests to their overall price of goods and services. Because Alliant Energy is a regulated utility, we are unable to do that.  By charging only the customers who use this service, it’s a fair way to pay for this option. Only the customers who choose to use this service will be charged the fee.

 

That's the closest I've been able to find an answer, so far. As I've said before in other posts, I suspect that it has to do with utility companies using a third party, and you're technically paying the third party to act as a middle-man, you're not paying the utility company directly. This is probably why the utility company will refuse to even take your credit card payment, and will always refer you to either an outside phone number and/or web site.

 

Here's my thoughts: While this set-up probably doesn't violate the terms of VISA/MC policy in a strictly technical sense, I feel that it still violates the spirit and intent of VISA/MC policy. I really couldn't care less who handles my payment. If my power bill is $50, I expect to pay $50, not $55.95.

 

And before some yahoo speaks out their other end, I pay my utility bills on time, so this isn't necessarily an issue with me, but I would like to have an added option, and I also feel that things such as this should be consistent. I also fear that retailers will eventually catch on, and the card readers at Wal-Mart, Target, etc., will have a third party's company logo on them and all sales will be processed through them, and thus a surcharge will be added to our everyday purchases. I believe in the "domino theory" and believe that once the seed has been planted it will grow out of control unless nipped in the bud. After all, the same rationale, "By charging only the customers who use this service, it’s a fair way to pay for this option. Only the customers who choose to use this service will be charged the fee.", is pretty broad and could be used to justify it anywhere.

[GEORGE]

THE GAS COMPANY...ELECTRIC COMPANY IS NOT THE ONE WHO IS COLLECTING THE FEE

 

THE 3rd PARTY PROCESSOR IS COLLECTING IT

 

My GAS COMPANY and ELECTRIC COMPANY want like $3.00 so I just have to still send a check...

 

They WON'T process the transaction with-out you paying the fee...

[GEORGE]

"IF" you did get charged $50.00 + $3.00 HOW CAN YOU DISPUTE THE $3.00???

 

It is not like you would have a "CASH REGISTER RECEIPT" that says...

 

GAS $50.00

FEE $3.00

TOTAL $53.00

[Uncle Leo]

"IF" you did get charged $50.00 + $3.00 HOW CAN YOU DISPUTE THE $3.00???

 

It is not like you would have a "CASH REGISTER RECEIPT" that says...

 

GAS $50.00

FEE $3.00

TOTAL $53.00

<{POST_SNAPBACK}>

 

Somewhere else on the website it said something about the fee showing up as a separate line item on your credit card bill.

 

So, to add to the illusion of staying within the policy, the paper trail is set up to suggest that you're technically not charged any more than the bill.

[Uncle Leo]

I wrote VISA back and asked them to clarify. Their response...

 

Thank you for your response, but it really didn't answer my question.  I don't have a specific instance to dispute, but am seeking clarification on VISA's surcharge policy.

 

How is it that a utility company can get away with adding a surcharge?  I realize that they are directing the customer to a third party, and are not collecting the surcharge directly, but the result is still the same.

 

VISA's response, which does address the specifics of the question...

 

Thank you for your additional communication.

 

Visa has certain regulations that all merchants which accept Visa cards must follow. Visa merchants are not permitted to, in general, pass on the merchant's transaction fee to the cardholder as a Visa "service charge," "service fee," or "surcharge," even on sale items. A merchant may offer a discount for cash however, the cardholder must be made aware of this prior to entering into the transaction.

 

Merchants charging a convenience fee mainly include government entities, utilities, colleges and universities, as they usually have a third party service provider process the transactions for them. So a convenience fee is not for the use of a Visa card but for the merchant to provide a convenient method of payment outside its normal payment method through a separate third party service.

 

To report any merchant practices that you feel are inappropriate, please notify the disputes area at the financial institution that issued your card account. Your card issuing bank has access to the appropriate Visa rules and regulations as well as to the Notification of Customer Complaint forms which should be used by your bank to document and file merchant complaints.

 

We hope this information proves helpful.

 

Thank you for writing.

 

VISA Webmaster

 

The added emphasis in bold is mine.

 

Short of a fear of consumer backlash, and potential loss of sales, what's to stop retailers from doing the same thing?

 

Seems that all a retailer would have to do is change their policy and redefine what "normal" payment methods are, then establish a convenient alternative through a third party.

[Adam]

MBNA billpay

[GEORGE]

MBNA billpay

<{POST_SNAPBACK}>

That would work "IF" you had a ZERO BALANCE ($0.00)

 

I have a BT running at 1.00%

 

The BILLPAY would be at 12.49%

[TampaDude]

Short of a fear of consumer backlash, and potential loss of sales, what's to stop retailers from doing the same thing?

<{POST_SNAPBACK}>

 

That's exactly why they won't do that...any merchant adopting a policy of surcharging customers for CC purchases, which make up the majority of their sales, would be committing financial suicide.

[Uncle Leo]

Short of a fear of consumer backlash, and potential loss of sales, what's to stop retailers from doing the same thing?

<{POST_SNAPBACK}>

 

That's exactly why they won't do that...any merchant adopting a policy of surcharging customers for CC purchases, which make up the majority of their sales, would be committing financial suicide.

<{POST_SNAPBACK}>

 

I want to agree with you, and basically I do, but I know I'm too much of a conspiracy theorist at times.

 

Conspiracy theory of the day: Several large retailers doing it all at once... hence leaving little choice.

[TampaDude]

Short of a fear of consumer backlash, and potential loss of sales, what's to stop retailers from doing the same thing?

<{POST_SNAPBACK}>

 

That's exactly why they won't do that...any merchant adopting a policy of surcharging customers for CC purchases, which make up the majority of their sales, would be committing financial suicide.

<{POST_SNAPBACK}>

 

I want to agree with you, and basically I do, but I know I'm too much of a conspiracy theorist at times.

 

Conspiracy theory of the day: Several large retailers doing it all at once... hence leaving little choice.

<{POST_SNAPBACK}>

 

Far too many retailers out there...ya gotta love competition...good for the consumer!