DTE Energy plans to tack on a new credit card fee

• The new charge comes as DTE is seeking to raise electricity and natural gas rates.
• The fee, the Detroit-based utility said, will go “directly to the processor and does not benefit DTE.”

If you pay your DTE Energy bill each month by credit or debit card, the utility plans to start charging you an additional $2.99 fee per transaction ― more if you have a commercial account.

The change, the company told the Free Press on Tuesday, Jan. 6, is part of a move to recoup what the utility said it is being charged by third-party payment processors.

The new charge also comes as DTE is seeking to raise electricity and natural gas rates — yet again — and as many consumers feel they are being forced to move to increasingly more electronic payments and yet pay more.

The fee, the Detroit-based utility said, will go “directly to the processor and does not benefit DTE.”

And the additional charge, which the company called a “small processing fee” and said is “a standard practice across many companies,” begins March 2. Business customers face a transaction fee of $9.99.

The new fee soon to be charged by DTE — which still accepts checks and currency — raises a key question: What does it really cost to use a credit or debit card?

Everywhere consumers go now in Michigan, it seems, people are being forced to pay by credit or debit cards instead of with coins and bills, including at parking meters, and some retailers are no longer accepting cash at all.

To save money, the federal government has even stopped minting pennies.  

So while some credit cards advertise 1%-3% or perhaps even more ― as so called “cash back” incentives on certain purchases to get you to use them ― merchants, like DTE, also are increasingly tacking on fees.

Ever more credit card fees

DTE, of course, is not alone in adding a fee.

Two years ago, the state’s other large utility, Jackson-based Consumers Energy, added a $2.99 and $9.99 processing fee for residential and business customers who made payments by credit cards or debit cards.

“While we recognize that the costs of goods and services continue to rise, we remain committed to keeping customer bills fair and price increases low,” Consumers Energy told the Free Press on Tuesday, adding that it still also offers “fee-free payments.”

More: Consumers Energy won’t accept credit, debit cards for auto pay; adds new fee

Before 2013, banks and credit card companies prohibited merchants from adding a surcharge, but since then, it has become an increasingly more common practice in many states.

Only a few states — including Connecticut, Maine and Massachusetts — have baned credit card surcharges. Others have laws that limit some transaction fees. Michigan, however, is not one of them.

“Retailers may — but are not required to — charge for processing a credit card transaction,” the state attorney general’s office recently pointed out on Michigan.gov, adding fees are now permitted by merchant contracts.

The Free Press sent an email to the attorney general’s office.

The credit card policy change, the attorney general’s office said in its statment, was prompted by a settlement after retailers brought a class-action lawsuit against credit card companies and big banks, which relented on the industry ban.

A $2.99 fee on a $100 monthly bill comes to about 3%.

$1,200 a year in fees

But now, some retailers are also concerned that the fees are ubiquitous.

Last month, the Merchant’s Payments Coalition estimated that the amount banks charged merchants to process credit cards ― sometimes referred to as swipe fees ― during the holidays alone would be nearly $20 billion nationwide.

The coalition ― which is made up of retailers, supermarkets, restaurants, drug stores, convenience stores, gas stations, online merchants, and other businesses ― said it aims to reform the U.S. payments system “to make it more transparent and competitive.”

The $20 billion figure, the group added, was based on an average 2.35% rate.

Swipe fees are the “highest operating cost after labor throughout the year” for most merchants, according to the coalition. And since the pandemic, starting in 2019, they’ve risen 70%, reaching a record $187.2 billion last year.

The coalition estimated the annual cost to families in fees to be about $1,200.

Still, at least one financial technology company, American Deposit Management, also makes the case that it’s cheaper than processing a check, not counting the time it takes to get them, write them, and put them in the mail.

“The cost of check printing supplies and bank fees can add up quickly,” the Wisconsin-based company said, calculating the costs to process a single paper check to be about $4, including bank fees, check printing and a postage stamp.

In its statement, DTE said it’s trying to “keep energy costs as low as possible,” adding that it aims to “ensure that only customers who choose to pay by card cover their costs, rather than all customers sharing those costs.”

Those who don’t want to pay the fee, the utility said, can “explore fee-free payment methods.”

Those methods, the utility said, include setting up online bank account payments, mailing a paper check or money order or paying in person at a DTE kiosk with, again, a check — or with cash, which DTE is still accepting.

Contact Frank Witsil: 313-222-5022 or fwitsil@freepress.com

This story has been updated to include additional information.