To Encourage Internet Use, CA DMV Drops $4 Credit Card Fee

Business Wire, July 1, 2004

SACRAMENTO, Calif. -- The California Department of Motor Vehicles has announced that it will drop its $4 credit card fee to encourage Internet renewals for vehicle registrations. The DMV has been working for months to eliminate the fee, and the reduction becomes effective tomorrow (July 1st).

"This is the latest step by DMV in implementing Governor Arnold Schwarzenegger's directive to reduce lines and wait times at DMV field offices as quickly as possible," said DMV Director Chon Gutierrez. "Internet renewals of vehicle registrations have been extremely popular among DMV customers for the past four years. But many customers have resisted that move because of the $4 fee for using a credit card. We hope the elimination of that fee will open the floodgates to a large increase in Internet renewals," said Gutierrez.

After the DMV's success last fall in slashing the vehicle license fee (VLF) by two-thirds at lightning speed, Business, Transportation & Housing Secretary Sunne Wright McPeak asked DMV to immediately shift its attention to the Governor's second DMV priority -- reducing lines and wait times. In late February, the Governor granted DMV a hiring freeze exemption to replace 400 of the more than 1,000 employees the department had lost in the past four years. The department said those new hires are already triggering significant wait time reductions.

DMV officials say at least 60 percent of the walk-in customers at field offices are there for vehicle registrations. Therefore, shifting more renewals to the Internet should cause a significant reduction in field office lines. It should also save money for the State in the midst of a budget crunch. Currently, Internet renewals cost DMV only one-third as much as an in-person renewal -- $3 instead of $10.34. If large numbers shift to the Internet, DMV officials believe the huge cost saving for the State could be even more.

"But even more important is the huge benefit in customer convenience," said Gutierrez. "And there are a lot more improvements coming that we'll be announcing later this summer. We think Californians will be thrilled with the new DMV for the 21st Century when all the exciting reforms are in place, including a lot of high-tech features. Just watch our progress."

When DMV first launched Internet renewals four years ago, the department absorbed the fee charged by the credit card companies. But after the first few months, the Legislature insisted that DMV begin passing the $4 fee along to customers. With the fee, roughly 4.5 percent of registration renewals (about 1 million transactions per year) have been handled by Internet. But it became increasingly clear that the fee was discouraging significant numbers of customers. DMV officials hope the elimination of the fee may increase Web renewals by more than 50 percent.