This baffles me:
Why does it cost $1.75 more for an online renewal than mailing in a check?
Here’s my current theory: They’re Ignoring Labor Costs
At some point in history, someone with the state probably noticed that accepting credit card charges involves absorbing merchant fees. I don’t know what the state’s merchant fees are, but let’s assume they’re around $0.25 per transaction plus 2.5%, which seems reasonable. If that’s the case, the cost of processing an online transaction would be $1.28. Not quite $1.75, but in the ballpark.
But rather than absorb those costs, the decision was made to pass them along to consumers. Strangely, they decided to call it a “handling” fee even though less handling is done with online transactions.
Processing a check doesn’t include those hard dollar costs.
However, processing checks involves collecting mail, opening it, typing the transaction into a computer (something the purchaser does online), reconciling the day’s transactions, and sending the deposits to the bank, and dealing with bounced checks. None of these steps involve a cash outlay, but they all take time. And as the old saying goes, “time is money.”
Someone needs to add up the salaries of everyone involved in processing paper transactions at the state from the mail room through accounts receivable. Divide the number of paper transactions processed per year by their salaries. Is that number higher or lower than $1.75 per transaction? My money’s on higher, which would mean that we’re taxing efficiency.