The ICBC Bans Payment by Credit Card on Monthly Insurance Premiums

Motorists in B.C. have one less payment option when it comes to paying their basic auto insurance premiums. The Insurance Corporation of British Columbia (ICBC) has banned the use of credit card payments for monthly premiums. The ICBC is the provincial crown corporation responsible for issuing drivers licenses, registration and providing universal auto insurance in B.C.

The ICBC’s move to ban monthly payments by credit card comes as a bit of a surprise, as we move towards an increasingly cashless society. The ICBC stopped accepting credit cards for one main reason: cost savings. No annual fee credit cards may be free for consumers to use, but there’s an indirect cost to the ICBC – interchange fees. Small businesses, and municipalities, have long complained about interchange fees, especially the higher ones on premium credit cards. This helped lead to the capping of interchange fees at 1.5 percent earlier this year.

The ICBC introduced the new rule on November 1, 2015, forbidding the use of credit cards on monthly premiums. The ICBC still accepts debit, cheques and cash. Motorists who decide to pay their auto insurance premiums yearly as a lump sum can still use their credit card.

“We made this change in an effort to reduce the costs associated with credit card payments and to ensure we can continue to offer an affordable payment plan program for customers who need it,” said Adam Grossman, a spokesperson for the ICBC.

“Unfortunately, credit card payments result in merchant fees we are responsible for paying and we are continually looking at where we can better control our costs to help keep our rates as low as possible for all customers.”

The ICBC hopes to save a $1 million yearly from the move in interchange fees.

The NDP isn’t impressed, saying the only way the ICBC can get away with this is because they have a monopoly on basic auto insurance in B.C.

“What they are doing is making things harder for their customers and clearly, given what they say the fees are, a lot of their customers were using this method of payment,” said NDP critic Adrian Dix.

Dix criticized the ICBC for wasting millions on projects that run over budget, forcing customers to suffer and be inconvenienced. The ICBC responded by saying it was looking at ways to save money to reduce the increase motorists will face on their auto insurance premiums.

The Liberals greenlight the ICBC in October to take $450 million from its optional insurance business and put it onto basic rates. This will bring down a planned 6.7-per-cent increase in basic rates to 5.5 per cent. There’s no word yet on if the increase in basic premiums will be further lowered due to the banning of credit cards on monthly payments.

The Bottom Line

It’s disappointing that the ICBC is no longer offering credit card payments on monthly insurance premiums. While credit card payments are still available for those who pay yearly, this move by the ICBC will most likely hit those with already tight monthly budgets hardest. Perhaps the ICBC could use a third party service like Plastiq for those who still want to use their credit cards. Or perhaps adding a modest surcharge could be another way to allow monthly credit card payments. In an increasingly cashless society, it would be nice to see cashless payments get easier, not harder.