CSUN’s plan to begin charging a 2.9 percent fee for online credit card transactions could be stalled following the approval of a California State Senate bill that prohibits the University of California, the California State University and state community colleges from imposing the new fees.

Senate Bill 860, proposed by State Sen. Debra Bowen, D — Redondo Beach, was passed in a 26-11 bipartisan vote June 1, and now heads to the California Assembly. The bill was originally designed to prohibit credit card surcharges in all areas of California government but was revised to target areas of higher education.

The CSU is opposed to the legislation because it would amount to a $7 million budget cut for the system were it to become state law, according to CSU spokesperson Clara Potes-Fellow.

In letters sent by the CSU to the Senate Judiciary and Appropriations committees, the CSU said SB 860 would eliminate the credit card payment option for students altogether, as the CSU claims it cannot continue to absorb the costs of credit card transactions — in the form of “merchant fees” — on its own. The CSU has said in order for it to continue covering the cost of these merchant fees, the system would be forced to cut from the budget in other areas, such as student services and instruction programs.

Representatives from Bowen’s office said student credit card usage actually saves money for the CSU when compared to other forms of payment. These transaction fees discourage the use of automated systems, such as the online payment system that exists on the CSUN Web Portal, they said.

In a statement from the CSU, the system agreed that the handling of electronic payments costs less than the handling of check payments, but added that the CSU cannot control the credit card processing fees charged by banks.

In a recent effort to reduce university spending, CSUN eliminated the use of credit cards at University Cash Services in the Student Services Building.

Credit cards may still be used online through the CSUN Web Portal. Transactions are limited to MasterCard, Discover, and American Express cards and will be subject to a surcharge, which is scheduled to begin June 20.

Visa transactions will no longer be accepted because the company charges a flat processing fee, as opposed to the other companies that charge a percentage processing fee. The university is currently in talks with Visa in hopes of finding a remedy to this, according to University Controller Robert Barker.

According to Barker, credit card merchant fees cost the university about $1 million every year, with approximately $650,000 of that total coming straight from the annual CSUN operating budget.

“The university is going to have great difficulty trying to continue to absorb this cost,” Barker said.

CSUN administrators do not have the option of adding new fees to student tuition to cover the cost, Barker said.

“(I) would not support an approach that would spread this across the campus population,” he said.

Most CSU campuses have processing fees already in place, according to Potes-Fellow. The CSU will wait to see what happens in the California Assembly, where the bill will face another vote later this month. After that, the law would have to be signed by Gov. Arnold Schwarzenegger to become state law.

No alternatives have yet been decided should the bill turn into law, Barker said.