Property taxes not payable with credit cards
I am interested in paying my real property tax using my credit card. However, I was informed by the City and County of Honolulu that they do not accept charge cards. They did indicate that I may be able to do this on the computer, using a bank's online bill paying services. I have inquired with several banks and have not found a bank that allows customers to pay property tax by credit card. Could you help me with this?
Answer: Although the city does allow you to pay for your motor vehicle registration and delinquent taxes with a credit card, it told us it has no plans to do so with real property tax assessments.
You might check with online payment companies, but the major banks that offer online payments deduct payments from checking accounts.
According to city Budget and Finance Department officials, there are many reasons why the city doesn't accept credit cards for real property tax payments. It boils down to: "The cost of accepting credit cards does not justify the benefits," at least from the city's perspective.
One major reason is that the city is assessed a merchant fee of about 2 percent on all amounts it accepts through charge card payments.
Because real property taxes are large, officials said that 2 percent fee would be substantial. By comparison, the city pays about 13 cents for each payment it processes through "lockbox," which refers to payments that are sent to the city treasury's post office box.
The payments are forwarded unopened to the lockbox vendor for processing, then deposited into the city's bank account.
The city does accept credit cards for delinquent real property taxes only because the interest and penalty offsets the merchant fee, officials said.
They noted there is a provision to charge a "convenience fee" for using credit cards, but said that fee would not be "insignificant" in offsetting the merchant fee. That fee is about $20 per $1,000 of real property taxes.
They also said that, because of certain laws, rules and regulations, the convenience fee cannot be directly associated with the merchant fee.
Most government entities that use the convenience fee charge a flat rate, according to city officials, and that may result in additional revenue or additional expenses, depending on the transaction amount.
On top of all this, officials say the city really isn't in the same position as merchants, who accept credit cards "because the probability of losing a sale is great if the customer has no other means to purchase their goods or services and walks out their door. It is different for the city, where real property taxes are concerned."
Basically, if you don't pay your taxes, the city can foreclose on your property.
Still not convinced? If you're looking to use your charge card to rack up rewards, officials said tax payments may not qualify for some reward programs.
Got a question or complaint?
Call 529-4773, fax 529-4750, or write to Kokua Line, Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210, Honolulu 96813. As many as possible will be answered. E-mail to email@example.com
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