Agenda Report
Fullerton City Council
MEETING DATE: march 7, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: Ellis chang, director of administrative services PREPARED BY: Ellis chang, director of administrative services SUBJECT: merchant and gateway provider agreements and credit card fee structure (Continued from February 21, 2023)
SUMMARY
City Council consideration of amendments and/or agreements with Tyler Technologies, Inc. and Global Payments Integrated to provide merchant and gateway services and absorbed credit card fee structure revisions.
RECOMMENDATION
Provide direction regarding absorbed or pass model for credit card and eCheck fees:
Option A: Blended Structure
City absorbs eCheck fees for utility and non-Public Works – Engineering and non-Community and Economic Development – Building and Planning customers. (The fee on eCheck is estimated to be a $1.25 flat fee.) City passes on credit card fees to customers.
City passes on eCheck fees to Public Works – Engineering and Community and Economic Development – Building and Planning customers.
City does not incur fees for cash, check or ACH / transfer payments initiated by customers.
City cannot currently accept payments via PayPal, Venmo, Zelle, etc.
Option B: Blended Structure
City absorbs utility credit card and eCheck fees.
City passes on non-utility credit card and eCheck fees to customers.
City does not incur fees for cash, check or ACH / transfer payments initiated by customers.
City cannot currently accept payments via PayPal, Venmo, Zelle, etc.
Approve and authorize City Manager, or designee, to execute and administer amendments and/or agreements and related documents with Tyler Technologies, Inc. and with Global Payments Integrated including renewals and/or extensions and future amendments, in a form approved by City Attorney.
Authorize City Manager, or designee, to terminate agreements with current merchant services and gateway providers.
CITY MANAGER REMARKS
Based on City Council discussion on February 21st, I believe that option A reflects the elements that the City Council discussed bringing back for consideration.
An option that the City Manager and Administrative Services Director have discussed is that the City Council could decide to also absorb the credit card fees for Downtown Parking and Parks and Recreation transactions.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
The fiscal impact will vary depending on City Council direction. Currently, the City absorbs about $395,000 in annual credit card fees of which about $30,000 relates to Downtown Parking and Parks and Recreation ($5,000 and $25,000, respectively). The amount the City pays in credit card fees varies year over year based on credit card payment transaction amounts and volume. Assuming 50% of utility payment transactions change from credit card to eCheck, the fiscal impact of Option A has an estimated $340,000 annual savings. Option B would result in an estimated $140,000 annual savings.
Per the option identified in the City Manager Remarks, if City Council decides to absorb Downtown Parking and Parks and Recreation credit card and eCheck fees and direct staff to incorporate fees in future Fees and Charges schedules, the City may recover $30,000 in fees over time as the City incorporates them into future Schedules of Fees and Charges.
The cost of credit card fees with the current merchant and gateway providers against TylerPay and Global Payments Integrated are comparable. The only additional cost with the TylerPay agreement is for SnapLogic. The TylerPay agreement includes a fixed $4,000 annual cost for five SnapLogic integrations which staff anticipated absorbing in the current fiscal year budget.
DISCUSSION
Credit Card Fee Structure (continued from February 21, 2023) The City has evaluated the existing credit card fee structure and cost of accepting credit card payments as the City implements new accounts receivable and general billing, utility billing and cashiering software applications. The City paid about $395,000 in credit card fees in calendar year 2022.
The following table presents the total number of credit card transactions, total transaction amount and average per transaction amount for calendar year 2022.
City Council continued the Credit Card Fee Structure agenda item on February 21, 2023 with recommended options narrowed to the blended Options A and B presented herein. The following presents estimated fiscal impacts of Options A and B:
Option A: Blended Structure – City absorbs utility eCheck fees; City passes on utility credit card fees to customers and City passes on non-utility credit card and eCheck fees to customers. Staff estimates a $340,000 total net savings with about 50% of utility credit card transactions converted to an eCheck payment type.
City absorbs utility and non-Public Works – Engineering and non-Community and Economic Development – Building and Planning eCheck fees at about $55,000 ongoing cost per year.
City passes on credit card fees to customers and passes on eCheck fees to Public Works – Engineering and Community and Economic Development –Building and Planning customers for an estimated $200,000 savings.
Option B: Blended Structure – City absorbs utility credit card and eCheck fees and City passes on non-utility credit card and eCheck fees to customers City continues to absorb utility credit card and eCheck fees at about $255,000 ongoing cost per year.
City passes on non-utility credit card and eCheck fees to customers for an estimated $140,000 savings per year.
The City will inform customers in advance of credit card or eCheck fees that the City will not absorb. The City will send mail inserts with routine invoices to customers and display signs where staff takes card reader payments in person. Customers remitting payments online will also receive a notification at the time of payment via credit card or eCheck that the City will charge a fee to proceed with the transaction. They will have the opportunity to opt-in and proceed with the transaction or opt-out and remit payment via check or cash.
TylerPay and Global Payments Integrated Agreements
The City is implementing the following Tyler Technologies, Inc. software applications: cashiering, accounts receivable / general billing and utility billing. Tyler Cashiering is compatible with two merchant and gateway service providers – Global Payments Integrated and TylerPay.
The agreements submitted for City Council consideration would support moving all City merchant accounts from the current merchant and gateway service providers to either TylerPay or Global Payments Integrated. Once the City establishes a merchant account with a merchant and gateway provider, the provider is not typically changed due to disruption of service. Thus, the recommendation authorizes City Manager to renew / extend and amend both the TylerPay and Global Payments Integrated agreements.
The City currently has twenty-one merchant accounts (also referred to as MIDs) through which the City can accept credit cards, and shortly eChecks, either in person (with a card reader) or online.
The City plans to move all merchant accounts to TylerPay except the three Parks and Recreation and Public Works – Downtown Parking MIDs which the City will move to Global Payments Integrated. Parks and Recreation and the downtown parking kiosk / mobile application software currently only support real-time payment integration with Global Payments Integrated. Tthe City is evaluating the number of merchant accounts needed with the implementation of Tyler Cashiering. The City may need to add or remove the number and types of merchant accounts based on evaluation of organizational need.
The TylerPay agreement also includes SnapLogic which may enable customers to make payments for invoices issued by third party companies that the City contracts with for specialized billing such as ambulance, DUI restitution, alarm permits and false alarm billing, parking permits, etc. This evaluation has yet to occur. The City has the option to remove SnapLogic from the agreement if it finds it cannot accept payments for third party managed billings. The City may increase the number of SnapLogic integrations if it finds application of SnapLogic successful.
TylerPay supports real time integration with the accounts receivable / general billing and utility billing applications as well as with the Tyler EnerGov application used by Public Works – Engineering and Community and Economic Development – Planning and Building divisions. Additionally, staff anticipates a uniform customer payment experience for the TylerPay merchant accounts.
TylerPay, in conjunction with the Tyler Customer Self Service platform, will enable a customer to pay their accounts receivable / general billing invoice, utility invoice and any other invoices across the Tyler software applications at one time. The customer can select which invoices they would like to include in their “shopping cart” for payment. However, TylerPay treats payment of each invoice as a separate credit card or eCheck transaction, resulting in a separate credit card charge or eCheck withdrawal applied per invoice payment transaction.
TylerPay would eliminate the need for the Munis General Ledger or Utility Billing API Toolkits to support integration with Tyler Cashiering, allowing the City to remove these items and the Central Property File from the City’s existing Tyler Software as a Service (SaaS) Agreement dated April 1, 2023. This Amendment to the Tyler SaaS agreement includes removal of the no-longer-needed API Toolkits and the Central Property file and adds TylerPay, including SnapLogic. The City will finalize Exhibit 1 to this Amendment based on City Council direction on the credit card fee structure.
The City will finalize this agreement and related Global Payments Integrated documents with City Attorney approval as to form based on City Council direction on the credit card fee structure.
Next Steps
Staff will work with the City Manager’s Office to evaluate and select configuration options such as placing caps on credit card transaction amounts, not accepting certain credit cards such as American Express, etc.
Attachments:
Attachment 1 – PowerPoint Presentation
Attachment 2 – Draft Tyler Technologies, Inc. Amendment Attachment 3 – Tyler Technologies Payment Card Processing Agreement Attachment 4 – Draft Global Payments Integrated Agreement cc: City Manager Eric J. Levitt
Merchant and Gateway Provider Agreements and Credit Card Fee Structure March 7, 2023 - Page 2