Title
A Resolution establishing a user fee for all payment cards.
Body
Recommended Action: Adopt the resolution.
In 2001, the Board of County Commissioners approved a resolution that would allow credit or debit cards to be used for property tax payments. Providing this payment option gives citizens flexibility and convenience to make tax payments and may result in fewer delinquencies. For these transactions, Sedgwick County is charged merchant service fees by the vendors who process the credit card transactions (Visa, Mastercard, Discover). Over the years, Sedgwick County paid the fees as “the cost of doing business.”
In 2012, the Board of County Commissioners approved a resolution that established a 2% convenience fee on all tax payments made with a credit card and a flat fee of $3.95 convenience fee on all tax transactions using debit cards. These fees were established based on information at the time that the County incurred a flat merchant service fee for debit cards and a percentage of the total transaction for credit card transactions.
In reality every payment card transaction the County processes is processed as a credit card transaction and the County pays the percentage fee. This is due to the fact that the County does not accept PIN debit transaction. Debit cards can be processed two ways, PIN debit or signature debit. PIN debit transactions charge the merchant a flat fee, while signature debit charges a percentage of the total transactions like credit card transactions.
In 2016, Sedgwick County processed 35,512 card transactions at 28 locations, collecting $14,270,684. This represents taxes and fees collected in person and online by various agencies across the County organizaton. As stated, every card transaction processed by Sedgwick County is processed as a credit card transaction and costs the County approximately 1.7% per transaction. The percentage varies based on the card and if the card is a rewards card, pre-paid card, gift card etc. Sedgwick County incurred $241,676 in merchant service fees in 2016 for the processing of payment cards and collected $188,466 in convenience fees based on the formula adopted in 2012.
The attached resolution imposes a user fee of 1.75% on all payment card transactions (at all 28 merchant terminals). If adopted, the fees will be imposed starting on July 1, 2017.
Alternatives: The Board of County Commissioners could decline to adopt the resolution and stay with the current model.
Financial Considerations: The proposed 1.75% fee will recoup the merchant service fees incurred by the county. Based on 2016 data the Count incurred $241,676 in merchant service fees and collected $188,446.
Legal Considerations: This is a home-rule resolution which requires three votes for approval and becomes effective on the earlier of November 19, 2012 or the date of publication after adoption. Additionally, K.S.A. 19-221 and Payment Card Industry regulation allow the collection of a convenience fee for all transactions using a payment card.