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DMV projects rising merchant fees, plans optional service fee collected by payment processor
Summary
DMV told legislators merchant fees are the largest expense in Administrative Services and proposed using a processor-collected service fee to reduce agency costs once modernization puts all transactions online.
The Nevada DMV warned budget subcommittees that rising electronic payments will drive up merchant fees and described a plan to implement an optional customer service fee collected by the merchant services provider to reduce the department’s budgeted merchant-fee expense.
Bethany Musselman, administrator for Administrative Services, told the committee merchant fees are the largest expense in her budget account. She said DMV processes roughly 5.3 million financial transactions and approximately 3.9 million of those in FY 24 were paid by credit or debit card. Musselman said "in FY 24, DMV paid an average of $6.17 per credit transaction and 47¢ per debit transaction" and the department projects merchant fees of approximately $11,300,000 for FY 26 and $11,900,000 for FY 27.
To reduce the agency’s expense, DMV officials described a service-fee model where a merchant-services provider (currently Wells Fargo under the present contract) would collect an additional convenience fee from customers using credit or debit cards and retain that fee rather than passing it to the DMV. Musselman said the transaction gateway would show the DMV charge and a separate service fee that Wells Fargo would retain; because the fee would be collected by the contractor it does not appear in the governor's recommended budget.
Committee members pressed for likely customer impact. Musselman told the committee the vendor quoted a 1.95% service-fee rate; at DMV’s current average vehicle registration of $259 that would equate to about a $5.05 convenience fee. She also said eCheck would remain a no-fee payment option and DMV is required to offer at least one cost-free method of payment.
Why it matters: DMV is moving more transactions online as part of its modernization work. Officials said once vehicle services are in the future-state system (they said their goal is to have all vehicle services online by the end of the upcoming biennium) they can implement service fees more broadly and reduce the merchant-fee line in the budget.
What lawmakers asked: Senators and assembly members asked when the fee model could be implemented, how it would be phased so customers are treated consistently across legacy and future systems, and how much the budget would be reduced when the service fees are fully implemented. DMV said it did not reduce budget requests because it cannot yet precisely estimate the timing or magnitude of the reduction.
Ending: Lawmakers directed DMV to continue modeling the fiscal impact and coordinate with committee staff before budget closing.
