Product: Federal Payments
Company: ACH Direct Inc.
Perhaps it comes as a surprise that most Department of Motor Vehicles branches across the United States do not accept in-person electronic payments, only cash or checks. According to Jeff Thorness, President of ACH Direct Inc., the reason is twofold.
As state government agencies, DMV budgets may not allow for the expense of face-to-face electronic payments. Or, due to regulations, DMVs may not be authorized to pass on interchange fees to consumers, forcing them to absorb that cost themselves.
But, recently, MasterCard Worldwide, Discover Financial Services and American Express Co. authorized a convenience fee at government agency POSs.
"The convenience fee is a fee to the consumer for the convenience of being able to use that payment methodology," Thorness explained. "What it does is it pays for interchange. So, instead of the government absorbing the costs associated with credit card acceptance, the payer ends up absorbing those costs."
ACH Direct's Federal Payments service now uses the convenience fee feature, allowing government agencies like DMVs to accept credit and debit cards in person.
"The good thing here is that it doesn't cost the government anything," Thorness said. "We're supplying the terminal for free. We're processing the transactions for them for free. The people who choose to make the payments with a credit card are the ones that are paying the processing costs. And so it's a win-win for everybody."
According to Thorness, consumers are told upfront about the convenience fee and accept the fee as a part of paying with plastic.
This new Federal Payments feature was rolled out in August 2008. More than 500 VeriFone VX 570 Dual Comm POS terminals were placed in the DMV offices of an, as yet, undisclosed state that boasts one of the top 10 largest cities in the country.
Payments are processed over ACH Direct's Payment Card Industry Data Security Standard compliant PaymentsGateway platform. Thorness reported that ACH Direct is already processing 30,000 transactions a month on those terminals, with over $2 million being transacted per month. "That's a pretty high adoption rate," he said.
The Allen, Texas-headquartered processor is looking to expand Federal Payments across the United States and is finalizing its revenue sharing program for its reseller channel.
Thorness said resellers would need a little training on the rules and regulations related to convenience fee processing. "It's a little bit different than what they're used to as a standard credit card ISO," he said. "But it's not that much more to learn. It's not a big difference."
Federal Payments is not solely designed for the government sector. Colleges, universities, utility companies, nonprofit agencies and other organizations can also be set up with convenience fee processing.
ACH Direct Inc.
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