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HomeMy WebLinkAboutMinutes - 2/11/2008 - Finance and Personnel Committee . r FINANCE AND PERSONNEL COMMITTEE MEETING � Monday, February 11, 2008 Aldermen's Conference Room, 6:30 p.m. In Attendance:Committee Members: Chairman Alderman Murgatroyd, Alderman Peterson. and Alderman Schaefer. Absent: None. Also in Attendance: City Administrator Maxeiner, Director of Finance Black and City Clerk Jones. Chairman Alderman Murgatroyd called the meeting to order at 6:33 p.m. Mayor Low arrived at 6:40 p.m. Alderman Condon arrived at 7:12 p.m. City Attorney McArdle arrived at 7:20 p.m. Discussion Regardin�Credit Card Pavments for Citv Service Fees Finance Director Black informed the Committee that for most payments due the City for fees, fines or permits, customers currently must pay by either cash or check, with limited exceptions. As an example, Director Black indicated that utility customers could pay their bills by an automated clearing house (ACI�transaction from a bank account. He noted approximately 850 of the 7,000 water/sewer customers utilize this method of payment. Additionally, in the Parks and Recreation Department, credit card payments are accepted for program registration. He noted in 2006/2007,the department completed 1,460 credit card transactions totaling approximately$150,000. Director Black informed the Committee that Staff continues to receive requests from the public for � expanded options for the use of credit cards. Staff is seeking direction from the Committee regarding the following: • Expansion of the use of credit cards as an acceptable method of payrnent; • The types of services to be included in the expansion; • The acceptance of online payments; and • The implementation of convenience fees to customers using credit cards. Director Black provided a brief outline. Expansion of credit card options: Director Black noted that Staff has identified several advantages with regard to the City expanding the use of credit cards. First, it would enhance customer service to residents by providing another payment option. Second, expanding credit card acceptance would improve the timing of collections and reduce the frequency of water turn-offs, liens and collection agency referrals, related to checks issued on non-sufficient funds (NSF). Director Black indicated the primary disadvantage of expanding the use of credit cards is the additional fees charged to the City by the card processing service (e.g., bank fees, sales fees and transaction fees). He stated that fees on an over-the-counter transaction range from 1.4%to 3.0%, plus an additional $0.50 to $1.20 per transaction in dues. Pricing can vary based upon several factors including, sales volume, average sale amount,type of credit card used and method of sale (i.e., over-the-counter, internet, phone). Another potential disadvantage is the custodial responsibility of maintaining the security of customer data (e.g.,credit card number, PINs, etc.). Director Black opined it is Stai�s opinion that the disadvantages could be addressed satisfactorily and � that the advantages of using credit cards outweigh the disadvanta.ges. Finance and Personnel Committee Meeting �, February 11, 2008 Page 2 Services to be included: Director Black noted tha.t since the utilization of credit cards would be initiated primarily to irnprove customer service, the City should consider accepting cards for ali payments. However, he indicated fees charged to the City for each transaction should also be considered. If no convenience fee is assessed against the customer, the City should consider excluding high dollar or less frequent transactions, such as liquor licenses or building permits. Director Black sta.ted thax this type of fee is usually a transaction from a business or corporation and the fee(s) per transaction would be significant. Director Black informed the Committee that Staff has researched two potential vendors for credit card processing—Nova Information Systems ("Nova")and Illinois Funds E-Pay("E-Pay"). Nova, a partner of Amcore, could be utilized as part of the City's current banking services agreement and currently provides service to the Parks and Recreation Department. E-Pay is administered through the State Treasurer's office and offers both credit card processing and online payments. Contracting with E-Pay appears to be the best option because of competitive fees as well as the user-friendly on-line payment component. Director Black noted that utilizing the state contract would result in expanding credit card acceptance for over-the-counter transactions as well as on-line payments. The average fee for both would be approximately`?.1%, which consists of a discount rate based upon the type of card and a percentage of the total volume. � Responding to an inquiry from Alderman Peterson regarding the use of debit cards, Director Black stated that debit card transaction fees are assessed at a flat$0.51 per transaction. Mayor Low arrived at 6:40 p.m. Director Black advised that the City would incur costs to purchase credit card terminals, appro�umately $440 per unit, and for the installation and maintenance of equipment. Online qavments: Director Black informed the Committee that, as a rule, municipalities accept on-line credit card pa��ments for a limited selection of services because of limitations on the amount of inforniation that can be submitted by a resident and reviewed/verified by government staff. Most municipalities that accept on-line credit card payments do so for utility bills,parking tickets or other types of ordinance violations or fines. This type of transaction is easily identified by an account number or ticket number. More complicated transactions, such as building permits or program applications, are not processed on-line in most municipalities. It is Sta�s opinion that web-based payments should be limited to utility bills and parking tickets,at least initially. Convenience fees: Director Black stated that the City has the option of charging a convenience fee on credit card transactions. He noted the credit card processing agreement prevents any retailer from charging any additional fees for credit cards. However, convenience fees can be applied to internet, mail and telephone transactions. Director Black indicated that several municipalities in McHenry County charge a convenience fee, typically $1.25 for on-line transactions between $25.00 and $30.00. He stated the convenience fee mitigates revenue loss to the municipality resulting from accepting credit cards, but can also be considered as part of the City's cost of doing business. Staff is supportive of assessing a � convenience fee to those choosing to use credit cards for payments to the City. Finance and Personnel Committee Meeting L February 11, 2008 Page 3 Finance Director Black s�ated that Sta,ff believes the time is appropriate to move forward with expanding options available to customers of the City for payment of fees, fines and permits. Staff is recommending the following: • Offering over-the-counter credit card payments as an option for all fees, fines and permits; • Offering on-line payments for utility bills and other logical fees and fines compatible with the Illinois Fund E-Pay system; and • Assessing a convenience fee for those choosing to utilize credit cards for payments to the City. Alderman Schaefer indicated his support of implementation. Finance Director Black suggested terminals be installed in the Finance Department, Police Department and Community Development Department. A discussion ensued regarding the benefits implementation of the program would offer the City. Chairman Alderman Murgatroyd opined he preferred credit cards and debit cards not be used for sma11 transactions, as it would not be practical from a financial standpoint. Finance Director Black indicated he would like to initiate the program starting with utility bills and parking tickets. City Administrator Maxeiner opined some security concerns regarding the City having the responsibility of having credit card information on individuals. � A brief discussion ensued regarding the benefit of leasing credit card processing equipment versus purchasing credit card processing equipment. Responding to an inquiry from the Committee, Finance Director Black stated he would like to implement over-the-counter credit card transactions in the Fina.nce Department, Police Department and Community Development Department as soon as possible. Chairman Alderman Murgatroyd opined he would prefer beginning with one department, which would give the City an opportunity to address any issues prior to expanding services to other departments. Alderman Condon arrived at 7:12 p.m. Mayor Low departed at 7:15 p.m. City Attorney McArdle arrived at 720 p.m. Chairman Alderman Murgatroyd suggested that Staff look into the program further, and revisit the matter at a future Finance and Personnel Committee meeting in order to determine the best site for initiation of the program following research regarding the following: • limits on transactions; • leasing equipment versus purchasing; � convenience fees ascertained for on-line transactions; and • wha.t payments are to be included/excluded. � Finance and Personnel Committee Meeting � February 11, 2008 Page 4 Alderman Condon departed at 7:24 p.m. It was the cons�nsus of the Committee that Staff explore the program further and bring it back to a future Finance and Personnel Committee meeting in order to determine the best site for initiation of the program following research regarding the following: • limits on transactions; • leasing equipment versus purchasing; • convenience fees ascertained for on-line transactions; and • what payments are to be included/excluded. Adiournment Motion by Schaefer, seconded by Peterson,to adjourn the meeting at 7:25 p.m. Aye: Murgatroyd, Peterson, Schaefer. Nay: None. Absent: None. Motion carried. Respectfully submitted, .d��- �-� �,c,�,�, '� Steven C. Murgatroyd, Ch �rman L.