February 21, 2023
Credit Card Fee Structure
1 Payment Methods
Cash
Check
Credit Card
eCheck (coming soon)
2 Credit Card Fees
3 Current Credit Card Fee Structure
Absorbed Model
City pays (absorbs) the credit card fees.
City’s Fees and Charges Schedule currently do not incorporate credit card fee costs absorbed by the City. 4 Estimated Annual Credit Card Fees
5 Credit Card Fee Structure Options
Option 1. Passed – Pass credit card and eCheck fees to customers Option 2. Blended
Absorb utility credit card and eCheck fees (lower rates charged by credit card companies) Pass non-utility credit card and eCheck fees to customers Option 3. Absorbed
Option 4. Absorbed – Incorporate non-utility credit card and eCheck fees into future Fees and Charges Schedule 6 Option 1
Option 1. Passed – Pass all credit card fees to customers Estimated savings: $395,000
Note:
In an absorbed model, credit card companies apply a reduced rate on utility credit card charges. Regular credit card company rates are applied for all other credit card charges.
In a passed model, credit card companies apply their regular rate for all credit card charges. 7 Passed Model – Credit Card
8 Passed Model – eCheck
9 Option 2
Option 2. Blended
Absorb utility credit card and eCheck fees (credit card companies apply lower rates to utility entities) Pass non-utility credit card and eCheck fees to Customers 10 2022 Credit Card Transaction Volume
11 Blended - Estimated Annual Savings
Option 2. Blended
Absorb utility credit card and eCheck fees (lower rates charged by credit card companies) Pass non-utility credit card and eCheck fees to Customers Estimated annual savings of $140,000
12 Option 3 and 4
Option 3. Absorbed
Estimated Annual Credit Card Fees incurred by the City: $395,000 Option 4. Absorbed – Incorporate non-utility credit card and eCheck fees into Fees and Charges Schedule With Option 4, Departments would look to incorporate non-utility credit card and eCheck fees in their fees and charges schedules for future City Council action. As fees and charges are adjusted to incorporate credit card and eCheck fees, City could, with time, recoup this cost.
With time, possible annual savings of $140,000
13 Recommendation
Provide direction with regard to an absorbed or pass-through model for credit card and eCheck fees:
Option 1: City to pass-through credit card and eCheck fees to customers; Option 2: Blended Structure –
City to absorb utility credit card and eCheck fees, and City to pass-through non-utility credit card and eCheck fees to customers; Option 3: City to absorb credit card and eCheck fees; or Option 4: City to absorb credit card and eCheck fees with City Council direction to incorporate non-utility credit card and eCheck fees in future Fees and Charges Schedules. 14