ACTION:
____________________________
Clerk/Secretary
Department: Finance Item No: PH7
Prepared by:
Melissa Adams, Accountant
Matt McDonald, Finance Manager Meeting Date: June 11, 2024 Approved by:
Mike Sylvia, Director/Treasurer
John Conley, City Manager Agenda Location: Public Hearing SUBJECT: PROPOSED CREDIT/DEBIT CARD AND ELECTRONIC CHECK SERVICE FEE LEVY FOR
ELIGIBLE CREDIT CARD TRANSACTIONS
RECOMMENDATION:
1.Open, conduct and close a public hearing to adjust the current credit/debit card service fee for eligible credit/debit card transactions to a market adjusted fluctuation.
2.Adopt City Council Resolution No. 2024- , modifying a credit/debit card service fee for eligible credit/debit card transactions.
CORRELATION TO CITY COUNCIL GOALS: Fiscal Responsibility.
PRIOR ACTION: On April 11, 2017, adopted City Council Resolution No. 2017-53, establishing a credit card service fee for eligible credit card transactions (Vote: 5-0).
STATEMENT ON THE SUBJECT: The City of Vista collects payments for various items, including but not limited to business licenses, permits, and fines. To accommodate diverse customer preferences, the City offers multiple payment options: cash, check, credit/debit card, and electronic fund transfer. The City accepts credit/debit card payments from Visa, MasterCard, American Express, and Discover cardholders, all of which charge a merchant fee for each transaction.
Credit/debit card payments can be made in person at the Civic Center, Vistix, Brengle Terrace, the Senior Center, the AVO Playhouse, and the Wave Waterpark, as well as online. Each of these locations is identified by a specific Merchant Category Code (MCC) that indicates the type of business conducted there.
Under California Government Code Section 6159(h)(1), the City is allowed to impose a service fee on users of credit/debit cards, provided the fee does not exceed the costs incurred by the City.
Credit Card Merchants’ Government and Higher Education Payment Programs. Credit card merchants offer "government and higher education payment programs," enabling the City to accept credit cards in all payment channels and assess a service fee as a separate transaction. This allows the City to recoup its costs for processing credit card transactions. In the private sector, retailers can adjust prices and add credit card service fees to the total cost of goods or services. The service fee must be a fixed percentage of the transaction amount, applied consistently across all transactions, regardless of amount.
AGENDA
REPORT
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SUCCESSOR AGENCY
BUENA SANITATION DISTRICT
JOINT POWERS FINANCING AUTHORITY
Opened, conducted and closed a public hearing, approved above recommendation and adopted City Council Resolution No. 2024-100. Vote: 5-0
MEETING DATE: June 11, 2024 PAGE 2
SUBJECT: PROPOSED CREDIT/DEBIT CARD AND ELECTRONIC CHECK SERVICE FEE LEVY FOR
ELIGIBLE CREDIT CARD TRANSACTIONS
To protect customers, several requirements must be met:
•Customers must be notified of the service fee before completing the transaction. •Customers must have the option to cancel the transaction if they choose. •Service fees are processed as separate transactions, resulting in two distinct entries on the customer's statement.
•Over time, service fees should be revenue-neutral to the city, meaning the total fees collected should not exceed the cost of processing the transactions. •There is no charge to the City for participating in the credit card merchants’ government payment programs.
Service Fee Eligible Transactions. Credit/debit card service fees are not proposed for transactions at Vistix, Brengle Terrace, the Senior Center, the AVO Playhouse, and The Wave, as these locations are categorized under recreational activities and do not qualify for the government payment programs.
However, transactions at the Civic Center, both in person and online, do qualify as eligible governmental transactions for which a service fee may be imposed.
Proposed Service Fee Structure: The proposed service fee for credit/debit card transactions, to be recovered by the City and charged to customers, includes fees associated with Visa, MasterCard, American Express, Discover, and electronic checks (eCheck) transactions. Merchant fees are composed of discount fees and interchange fees for processing each transaction. Interchange charges are the primary driver of these fees and have two components: a fixed cost per transaction for eChecks and a percentage of the total amount for credit/debit card transactions. The percentage rate depends on the type of card used and whether the credit card is present during the transaction. Additionally, the City’s bank charges service fees for authorizing, processing, and settling credit card transactions.
Calculation of the Amount of the Service Fee Charged for Credit Card Transactions. Staff proposes the following transaction fees: a fixed service fee of 2.95 percent for all credit card transactions, in addition to a minimum service charge of $2.50 for American Express transactions, and a fixed transaction fee of $1.95 for all eCheck transactions. These service charges are set by the credit card merchant, and the proposed fees will automatically adjust to match any changes implemented by the credit card merchant.
California Government Code Section 66016, et seq. requires that before approving certain new or increased fees, a city must do all the following:
•Hold at least one public hearing;
•Publish notice of the hearing twice at least 10 days before the hearing; •Send notice of the meeting at least 14 days in advance to any interested person who has filed a written request; and
•Make available to the public at least 10 days before the meeting data indicating the amount of estimated cost required to provide the service for which the fee or charge is levied and the revenue sources anticipated to provide the service, including general fund revenues.
The City has published notice, in accordance with these requirements, on May 31, 2024, with this item’s public hearing to be held on June 11, 2024.
Upon City Council approval of the variable percentage credit/debit card fee levy, staff requests that any necessary agreements directly related to implementation of this program be delegated to the City Manager for execution.
EXHIBITS:
1.City Council Resolution No. 2024- , modifying a credit/debit card service fee for eligible credit/debit card transactions.
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RESOLUTION NO. 2024-
A RESOLUTION OF THE CITY COUNCIL OF THE CHARTERED CITY OF
VISTA, CALIFORNIA, MODIFYING A CREDIT/DEBIT CARD SERVICE FEE
FOR ELIGIBLE CREDIT/DEBIT CARD TRANSACTIONS
The City Council of the City of Vista does resolve as follows:
1.Findings. The City Council hereby finds and declares the following:
A.Chapter 2.68 of the Vista Municipal Code authorizes the City to set fees to recover costs reasonably borne by the City, including those for direct expenses incurred by the City (“fees”).
B.Section 6159(h)(1) of the Government Code authorizes a city to impose a service fee for the use of a credit/debit card or an eCheck, not to exceed the reasonable costs incurred by the city in providing for payment by credit card.
C.The City desires to charge a credit/debit card or eCheck service fee equal to the amount set by the credit card merchant for all eligible government merchant code credit card payment transactions executed at the City of Vista and through the City’s online payment service.
D.The revenues from the service fee charged by the City shall not exceed the City’s reasonable costs incurred as a result of providing credit card payment services to the public and will allow the City of Vista to continue to provide the community with the convenience of using credit/debit card and eCheck payment options for amounts owed to the City.
E.The City shall utilize available credit card merchants’ “government payment programs” to implement and collect the service fee.
2.Action.
A.The imposition of a credit/debit card and eCheck service fee for all eligible government merchant code credit card transactions is approved.
B.The City Council authorizes the City Manager to execute any and all necessary agreements with the credit card merchants that are necessary or helpful to the City’s participation in credit card merchants’ “government payment programs”.
C.The credit card service fee will be effective no later than 60 days after the execution of any necessary agreements with the credit card merchants. [Continued on page 2.]
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EXHIBIT 1
RESOLUTION NO. 2024-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
PAGE 2
3.Adoption. PASSED AND ADOPTED at a meeting of the City Council held on June 11, 2024 by the following vote:
AYES:
NOES:
ABSTAIN:
JOHN B. FRANKLIN, MAYOR
APPROVED AS TO FORM:
WALTER CHUNG, CITY ATTORNEY
By:
ATTEST:
KATHY VALDEZ, CITY CLERK
By:
APPROVED
Walter C. Chung
20240530091417
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