As of June 20, University Cash Services no longer accepts credit card payments in person in the Student Services Building, and CSUN students who make credit card payments online will be charged a 2.9 percent processing fee by a third party.
As a way to reduce spending, the university expanded its contract with CashNet SmartPay, which handled other cash services for the university, to collect a convenience fee from students that use the CSUN Web Portal online payment system.
Previously, the university was charged a merchant fee when students made credit card payments, according to Robert Barker, university controller.
The university could not continue to absorb the cost of those transactions, which totaled nearly $1 million in 2004-05, as a growing number of students opted to pay with a credit card, he said.
“Banks charged (CSUN) approximately two percent (for a) transaction,” Barker said. “It left less (money) for other things, like funding classes.”
The move, however, is not without its detractors, who are not limited to cash-strapped students.
A bill in the California Legislature would have prohibited the California State University, University of California and state community colleges from imposing credit card surcharges.
The State Senate approved the bill in June before it was put on hold in the Assembly.
The author, State Sen. Debra Bowen, D–Redondo Beach, eventually dropped the bill from immediate consideration in July.
Senate Bill 860 was originally proposed to allow California to use the purchasing power of all state agencies to negotiate better rates with credit card companies. The bill was later revised to solely target institutions of higher education.
According to Jenny Bretschneider, a consultant to Sen. Bowen, the CSU system did not seriously analyze or compare the costs of processing credit card payments with other forms of payment. Studies have shown that credit card usage would reduce costs for state agencies like the CSU, which traditionally require hiring personnel to process cash, debit, or check payments, she said.
“More work needs to be done to look at other costs of processing payments,” Bretschneider said.
Meanwhile, students and parents, who were unaware of the surcharge, must adjust to the changes.
If Ali Rajaei, biology major, had known of the surcharge, he said he would not have minded standing in line five to 10 minutes to pay with a debit card at Cash Services.
“Fifty dollars for a $1,500 transaction isn’t fair,” Rajaei said. “(It’s) just like parking (fees). It’s ridiculous. Everything is a rip-off here.”
Sherry Goodwin, whose daughter Nicole attends CSUN, said the university should have notified students of the surcharge. After paying online for the past three years, she said she eventually sent the payment through FedEx, since it would not have arrived in time to beat the payment deadline.
“I think it’s an outrage (students) weren’t notified,” Goodwin said.
Students who make payments online will find that Visa is no longer accepted. The online payment system accepts MasterCard, American Express, and Discover cards because they charge a percentage processing fee rather than the flat fee Visa does, said Nancy Banker, chief operating officer for CashNet SmartPay.
The 2.9 percent processing fee that SmartPay collects covers their software and interface costs, and pays for the annual data security audits that verifies their system is secure for schools and credit card companies to use, she said.
“It’s not as though there are not other options (for students) to use,” Banker said.
Associated Students President Chad Charton said that if SB 860 had become law, CSUN would have lost more money than smaller CSU campuses, whose credit card processing fees do not amount to as large an expense. Considering the university’s budget constraints, it would be worse for CSUN to continue to subsidize students’ credit card transactions and make up the difference by cutting student services, he said.
Similarly, the decision to either support or oppose a statewide bill that would have affected students in more ways than one was challenging, said Laura Kerr, director of legislative affairs for the California State Students Association.
With SB 860 on hold for the legislative session, the CSU system no longer has to absorb a school’s merchant fees, which would have made the credit card payment option financially unsustainable, she said.
While CSUN students continue to have the option to pay with credit cards, it has incidentally made higher education less affordable for the average person, Kerr said.
“It’s a Catch-22 for students.”
Julio Morales can be reached at firstname.lastname@example.org.