PURPOSE: 

The City Treasurer�s Office seeks City Council adoption of the resolution for Official Payments Corporation to act as third-party administrator in the acceptance of credit cards by phone and over the internet for bills and/or services owed to the City of Burbank.

BACKGROUND:

Credit card transactions for purchases up to $500 was approved back in 1997 for Parks & Recreation and expanded to all departments in 2000.  This was limited to walk-in customers only.  If a credit card is not presented in person, swiped through a credit card machine, signed, and verified, the fees are substantially higher.  To keep the fees low, the City elected to approve walk-in transactions only back in 1997 and 2000.   Each department was to monitor their own transactions and pay the charges associated with credit card use out of their own budgets.   This has been our mode of operation since the acceptance of credit cards.

Credit card usage has increased significantly since 1997 and with that so has the fees that the City of Burbank has paid.  In the past year the City has paid over $40,000 in fees associated with the acceptance of credit cards.  Presently, BWP approximates 500 customers pay each month with a credit card which results in bank fees charged between $1,500- $2,000 per month.  Just for informational purposes only, a neighboring city expects to pay over $118,000 in credit card fees this fiscal year for approximately 1,800 credit card transactions per month. 

ANALYSIS:

There is considerable business and consumer pressure to allow broader acceptance of credit card payments, including over the internet and telephone. 

Treasury staff researched many government agencies� sites on the internet, like the IRS, State of California, LADWP, Los Angeles County, and a few municipalities, and found that they all charge a convenience fee to accept payments by credit card on their website, but it is through a third party administrator called Official Payments Corporation.   The convenience fee is charged to the consumer and the amount of the fee is tiered, based on the payment amount.

The Treasurer�s office has worked with Burbank Water and Power on this and they are in agreement with accepting Official Payments Corporation as a third-party credit card administrator.  The City is ready to implement the acceptance of credit cards on the internet and over the phone for utility bills at Burbank Water and Power with the new Banner system ready to go live this Spring.   In the future, other departments may also implement acceptance of credit card payments in the same fashion, with a tiered convenience fee being charged to the consumer based on the payment amount.

If the Council recommends contracting with Official Payments Corporation as the City�s credit card third-party administrator, residential as well as commercial can elect to pay their water & power bills by credit card.  At the present time, only homeowners with bills under $500 can use their credit cards as a form of payment and they must come into BWP and pay in person.  This was the original agreement that was passed by council in order to limit the amount of credit card fees that the City had to pay.

FISCAL IMPACT:

If Official Payments Corporation accepts the payments on behalf of the City of Burbank for BWP utility bills, there will be no charge or fees incurred by the City.  This will result in a savings of approximately $18,000- $24,000 per year in BWP�s funds alone.  This is based on the present walk-in credit card usage.  There will be additional savings in other departments as well if and when they implement this program.   

RECOMMENDATION:

The City Treasurer�s office recommends the City Council adopt the proposed resolution authorizing Official Payments Corporation as the third-party administrator for the acceptance of credit cards over the internet and the phone as payment for bills and/or services owed to the City of Burbank.  Any convenience fee associated with credit card payments accepted by Official Payments Corporation on behalf of the City of Burbank will be paid by the consumer.

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