DATE:
August 20, 2024
TO:
Mayor and City Council Members
Chair and Board Members, Hesperia Water District
FROM:
Rachel Molina, City Manager
BY:
Casey Brooksher, Assistant City Manager
Marc Morales, Senior Accountant
SUBJECT:
Agreement with Paymentus Corporation
RECOMMENDED ACTION
It is recommended that the City Council and Board Members of the Hesperia Water District (District) authorize the City Manager to enter into a three (3) year agreement with Paymentus Corporation (Paymentus) in an amount not-to-exceed $817,425 for Interactive Voice Response (IVR) with Online Bill Payment, Presentment Services, and Print and Mailing Services for Water/Sewer utility bills.
BACKGROUND
Since 2010, the District has allowed customers to view and pay their water/sewer bills online through a secure website available 24 hours a day. Customers can make a one-time payment as a guest or set up automatic payments upon enrolling for an online account. Additionally, customers can elect paperless billing.
To provide customers with additional payment options and reduce wait times, a Request for Proposal (RFP) was issued in October 2020 to make expanded payment services available to the District’s customers. As a result of the RFP, InfoSend, Inc. (InfoSend) was awarded an agreement for Interactive Voice Response (processing electronic fund transfers through Automated Clearing House (ACH) and debit/credit card transactions via telephone in English and Spanish), Online Bill Pay, text-to-pay for mobile payments, and Presentment Services in December 2020. Bill print and mail services were subsequently added to the agreement in order to reduce District printing and postage costs, as economies of scale were achieved through the vendor performing these services.
ISSUES/ANALYSIS
These technological advancements in payment options have provided customers with several convenient methods to pay their water/sewer bills, including text-to-pay mobile payments, IVR automated telephone payments, and Online Bill Presentment and Payment services. However, InfoSend has recently been inconsistent in the reliability of its service. Failures related to InfoSend’s ACH processing and text-to-pay services have resulted in payment difficulties for the District’s customers. Specifically, ACH payment issues affected 371 utility customer accounts, and were the result of ACH processing delays of customer payments by as long as two months. Further, when attempting to resolve the issue, InfoSend duplicated payments on 165 utility customer accounts, which exceeded the customer's authorized payment amount. It should be noted that InfoSend did refund the duplicate payments and reimbursed customers for overdraft fees they incurred. However, the prolonged issue resulted in upset customers and caused the need for many hours of additional staff time in reconciling accounts to ensure that customer account information was accurately presented and reflected all payments made and received.
Given the noted reliability issues that have negatively impacted the District and its customers, staff have evaluated the customer payment services offered by Paymentus, which was deemed the next highest-rated firm from the RFP. Paymentus provides the same base services currently utilized by the District, such as an online platform for customers to make one-time payments as a guest, online enrollment, automatic payments, electronic billing, automated English and Spanish telephone payments, and text-to-pay, but also offers several additional convenient payment options for customers. These options include:
Digital Wallets, enabling customer use of PayPal, Venmo, Apple Pay, and Google Pay Payments can be accepted at offsite locations, including Walmart, CVS, and Walgreens Indoor and outdoor self-service Kiosks with multilingual capabilities, allowing customers to pay by cash, check, and debit/credit cards.
With the expanded options through Paymentus, District customers would benefit from even greater payment flexibility and could make their water/sewer utility payments in the way that is most convenient for them. Further, customers would continue to have the option of choosing no-fee payment methods as well. The existing no-fee payment methods and credit/debit card fee options would continue to apply, as described below:
No-Fee Payment Options
With the expanded options through Paymentus, the District will continue to offer the following No-fee payment options: Cash, Check, Money Order, Cashier's Check, and electronic ACH payments.
Credit/Debit Card Fees
As authorized by the City Council and Water District Board of Directors in February 2020, credit and debit card transactions will continue to include a fixed convenience fee of $3.50 for utility-type payments (or a fixed percentage service fee of 2.25% for non-utility-type payments) to recover the related costs charged to the District.
Projected Cost Comparison
Should the Board approve transitioning the referenced services to Paymentus due to the reliability issues experienced with the current provider, a three-year agreement would include the same base services currently utilized by the District, along with the addition of an outdoor kiosk, and an indoor kiosk, for approximately $272,475 per year, which is $110,198 more than the cost with the existing vendor (with no vendor-provided kiosks). Estimated costs are primarily based upon the projected number of customer enrollments, per piece mailings, and number of payment transactions. An estimated annual cost comparison between the current vendor and what the District would pay by transitioning to Paymentus is shown on the following page:
The transition to Paymentus would also provide for the additional customer payment options previously noted. Paymentus currently has over 2,200 clients, including the City of Ontario and the Coachella Valley Water District.
American Rescue Plan Act (ARPA) Funding
Funding for the transition to Paymentus and the first year of services has been identified through the use of ARPA funds due to the revenue loss experienced by the District during the pandemic, which can be reimbursed to the District through ARPA funds. If available ARPA funding has been exhausted, funding for the subsequent two years of the agreement will be included within the Water District's annual operating budget.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health: Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
The transition to Paymentus for Online Bill Payment, Presentment Services, and Print and Mailing Services, including IVR, Text-to-Pay, and Indoor/Outdoor Kiosks has an estimated annual cost of $272,475. This annual cost is $110,198 higher than the existing vendor, with whom service failures have negatively impacted the District and its customers. Further, an Indoor and an Outdoor Kiosk has been included in the estimated cost for Paymentus in order to provide additional flexibility for customer payment options.
A three-year agreement with Paymentus would result in an agreement for the not-to-exceed amount of $817,425. FY 2023-24 funding for the transition to Paymentus through the first year of the agreement is estimated at $272,475 and has been identified through the use of ARPA funds, due to the revenue loss experienced by the District during the pandemic, which is able to be reimbursed to the District through ARPA. The subsequent two years of the agreement will be included within the annual operating budget of the Water District if available ARPA funding has been exhausted.
ALTERNATIVES
Provide alternative direction to staff.
ATTACHMENTS
None
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the City Council and Board Members of the Hesperia Water District Agreement with Paymentus
August 20, 2024