City Council Agenda Report
Meeting Date: December 16, 2025
From: Alice Hui, Director of Finance/City Treasurer
Department: Finance
Submitted by: Joaquin Leon, Deputy City Treasurer
Subject
Client Satisfaction Offer with Global Payments Direct, Inc. for Payment Processing Services Recommendation
A. Find that it is commercially unreasonable to rebid the contract for payment processing services and that the best interests of the City are served by a direct award of a contract to Global Payments Direct, Inc., without a competitive selection process, pursuant to Sections
3.32.110(B)(2), 3.32.220 (B) and 3.32.110(B)(3) of the Vernon Municipal Code; and B. Approve and authorize the City Administrator to execute the Client Satisfaction Offer with Global Payments Direct, Inc., in substantially the same form as submitted, for payment processing services for a total amount not-to-exceed $750,000, for a 3-year term.
Background
On November 2013, the City entered into a service agreement with Payment Processing Inc. (now Global Payments Direct, Inc.) for payment processing services as an integrated solution to the City's then new cashiering system, Tyler Cashiering. The initial term of the agreement was for three years, after which it would automatically renew each year for a consecutive twelvemonth term until either party terminated the agreement. Henceforth, Global Payments Direct, Inc. (Global Payments) has provided payment processing services which include credit card, check, and online payments.
On February 7, 2023, City Council approved the Merchant Application and the OpenEdge Check Services Merchant Application to establish three new merchant accounts with Global Payments to be used specifically with the City's new Enterprise Resource Planning (ERP) system, Tyler Munis. The processing of the new accounts began in April 2023, which included various ERP system modules (Accounts Receivable, EnerGov, and web-based Tyler Cashiering), and was necessary to maintain the payment process integration between Global Payments and Tyler Cashiering.
In an effort to reduce rates, staff proposes a 3-year renewal with Global Payments. The original Merchant Application Agreement had an auto-renewal clause in order to ensure that services would not be interrupted. These are standard practices for Global Payments and cannot be removed. In order to enter into a new agreement, the City’s accounts would need to be closed and new merchant accounts established. Switching payment processor accounts every three years would not be economically reasonable or efficient for the City. Pursuant to the City’s special good governance reform contract terms and procedures, Vernon Municipal Code (VMC) Section 3.32.220(B), contracts shall be rebid every three years unless found commercially unreasonable to do so. The authority to exempt professional service contracts from competitive selection requirements and term limits when contracts exceed $100,000 falls under the jurisdiction of the City Council as indicated in VMC Section 3.32.110(B)(3). The services Global Payments provides are an integrated part of the City’s ERP and cashiering system, representing a long-term configuration and investment. Accordingly, staff is requesting that City Council find that it would be in the best interests of the City to award the contract directly to Global Payments, without a competitive selection process and also find it commercially unreasonable to rebid the proposed agreement, as it is economically and organizationally impractical to switch payment processors. Additionally, City Council approval is required for the contract renewal pursuant to VMC Section 3.32.030(A) as it exceeds $100,000 in value.
The proposed renewal for a three-year period through the Client Satisfaction Offer, provides reduced processing rates with costs based on transaction volume. Estimated total fees are approximately $699,000 over the three-year term based on current activity levels. To accommodate potential increases in transaction volume in upcoming years, the Finance Department requests budget authority not to exceed $750,000 over the three-year period. Since merchant processing fees are calculated as a percentage of each transaction plus per-item charges, actual costs will vary based on the City's payment processing activity. The reduced rates negotiated through this renewal provide cost savings compared to continuing under current terms.
The proposed Client Satisfaction Offer has been reviewed and approved as to form by the City Attorney’s office. The Client Satisfaction Offer and Rate Analysis contain confidential information and will be provided to City Council under separate cover and are not included in the public agenda packet.
Fiscal Impact
The fiscal impact is not-to-exceed $750,000. Sufficient funds are available in General Fund, Finance, Bank Service Fees Account No.011-010-130-529010 for the current fiscal year, and appropriate funding will be budgeted in subsequent fiscal years to accommodate actual processing costs.
Attachments
None.