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					                                                    TOWN COUNCIL
                                         WORKSHOP AGENDA DOCUMENTATION


PREPARATION DATE: October 12, 2008               SUBMITTING DEPARTMENT: Various
MEETING DATE: December 15, 2008                  DEPARTMENT DIRECTOR: Various
                                                 PRESENTER: Roxanne DeVries Robinson & Audrey Cohen-
                                                 Davis
SUBJECT: Electronic Payments and Convenience Fees




PURPOSE OF WORKSHOP ITEM
For the Town Council to consider directing Staff to pursue a preferred option for accepting electronic
payments/credit cards in payment of any tax, assessment, license, permit, fee, fine or other money owing to the
Town, or in payment of any bail deposit or other trust deposit.

BACKGROUND/ALTERNATIVES
A workshop was held in June, 2008 to discuss accepting electronic payments to the Town in payment of
any tax, assessment, license, permit, fee, fine or other money owing to the Town, or in payment of any
bail deposit or other trust deposit, and to consider a convenience fee for credit card transactions.

Several questions were asked by Council as set forth below with information provided for each question.
As you will see, the issue can seem very complicated.

1) What are numbers on what the increase in the recovery could be if we accept credit card payments? Is
there a potential additional 20% increase in the recovery of fines and fees?

        Answer: Matt Weisman, IT Director, has done some initial research in this area. From several
different sources including the companies that provide electronic payment processing services, there
appears to be a consensus that the Town might see as much as a 20% increase in fee collection for fines
such as parking tickets. We do not have data to support this consensus, merely information relayed to us.

2) Approximately 40% of the customers will convert from check to credit card. Does this create a savings
for the town in terms of processing, paper use, etc.?

        Answer: This could save paper in terms of the number of utility bills printed and mailed from
Freedom mailing. The Town contracts with Freedom Mailing to generate and mail our utility bills. The
current process is that the meters are read, the data is transferred to Caselle, we generate the billing data,
the data is sent to Freedom Mailing, and then Freedom Mailing generates paper bills and stuffs and mails
them.

        If the Town chose to accept electronic payments/credit card payments, a required purchase would
be an additional module from Caselle (our current financial software company) to process and account for
electronic payments. If we obtained this additional module, we could then select those utility customers
who have chosen to pay by e-check (ACH) payments or by credit card and send an electronic bill instead

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of a paper bill, at the customer’s discretion. Currently, customers can select e-check payments, but the
Town does not have the electronic payment module from Caselle and therefore a bill is still printed and
sent to those customers. It is staff’s understanding that the additional module from Caselle is $2500 and
then an additional minimal quarterly maintenance fee.

3) What it will cost the Town in fees from the credit card company?

        Answer: The costs to the Town depend on the option that is chosen for accepting and processing
electronic payments. It is staff’s understanding that there are three options to choose. Those options are
outlined below.

Option 1: The Town of Jackson accepts electronic payments and any credit card processing
fees/convenience fees are absorbed by the Town of Jackson and paid to the electronic payment gateway
and payment processing service providers.

If Option 1 is selected, it would cost the Town a percentage of whatever fees are collected and that would
need to be paid by the Town to the processing provider. At a time when the Town is struggling to cut
costs and find new revenue to support services, it would seem un-wise to take on this expenditure for the
sake of convenience.

Option 2: The Town of Jackson collects a fee for processing the electronic payment from the customer
and then pays the electronic payment gateway and payment processing service providers from these
collections. This is where the most confusion sets in. Some credit card companies allow flat fees, some
allow a percentage fee, and some require a flat fee. The fess and acceptance guidelines also vary based on
what type of payment is being made (tax vs. fee/fine). If this option were selected, the town would pay
the raw processing fees. It is difficult to determine the exact impact to the Town. We can estimate using
budget figures and the figure of 40% of customers choosing this option, but accuracy cannot be
guaranteed. The fees charged for processing costs could range anywhere from 2 percent of the fee/fine
collected all the way up to 4.75 percent of the initial fee/fine. Retailers or other businesses have some
data regarding payment types and generally only handle one type of charge (retail/fee for service) and
have data from previous years where they can determine an estimate of the cost to the company. The
Town has no such data. We can only extrapolate from other agencies such as the Teton County Treasurer,
other municipalities, etc. If we had to estimate, staff feels it might cost somewhere between 2 – 4.75.
Staff strongly recommends the Town not choose Option 2 due to different fee structures and payment
guidelines. Also overhead and increased labor would offset any savings. A detail, actuarial analysis
would have to be done to determine what the target fee would be so that any agreements negotiated with
processors would not result in a net loss to the Town. Another issue to keep in mind is that a private
sector business can easily wrap these costs into the final cost of their “product”. This isn’t always the
case with public sector entities.

If the Council wants to choose this option, staff would recommend we limit the type of cards we collect to
one or two and proceed from there.

Option 3: The Town of Jackson contracts with a payment processor, the payment processor charges and
collects the processing fee/convenience fee from the customer. The original fee/fine is then passed back
to the Town with payment detail and is imported, in electronic format, into our accounting system. This
is considered a revenue neutral method.

If Option 3 were selected, the costs to the Town of Jackson would be limited to the Caselle Electronic
payment module and any acceptance equipment beyond negotiated “free” equipment. The companies that
combine these services charge a flat negotiated fee + or percentage or both and negotiate all of the
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contracts with the various payment processing firms. Staff has researched the Teton County Treasurer’s
current method of accepting payments and they utilize Option 3. Donna Baur provided her insight into
the issue and was very helpful with this information. They currently utilize a company that has a
minimum fee on a sliding scale and then a percentage fee as the fee increases. Customers can go online
from their home or wherever and pay their taxes through this service. Customers can also come to the
desk and pay their taxes through this service. This option makes the processing revenue neutral for the
county in that the payment processor accepts the tax payment and the convenience fee and then forwards
the tax payment to the County through a report indicating which parcel or vehicle is being paid for.

The County Treasurer is currently in the process of reconsidering the current payment processor they
utilize in order to lower the fee passed on to the consumer, to allow them to have a card swipe payment
system at their office, to allow e-check (ACH) payments and also in order to allow them to accept debit
cards.

If Option 3 were selected, there is the possibility that the fees passed on to the consumer might be slightly
higher than Option 1 or 2, however; it depends on which payment processor you contract with, what fees
you negotiate, what type of payment is being made, and what method of payment is used. There are
payment processors that charge a flat 5% of the fee being paid. There are also other payment processors
out there that charge a 2.5% fee plus 50 cents on each transaction.

Staff recommends the Council direct staff to pursue Option 3. This option provides the most value and
convenience and places the cost responsibility on the direct users of the convenience instead of on the
general electorate. While Option 2 would also meet these criteria, Option 3 reduces the amount of staff
labor involved in the process of payment acceptance and processing and thereby reduces process expense
for the Town.

Should the Council provide this direction, staff would then research various payment processing
companies and make a recommendation based on compatibility with existing account systems, service
level, and value to the payer at a future Town Council meeting, in order to enter into a contract.

4) Should we take out language from the draft Ordinance that fees are borne by person making payment?
        Answer: The Town Attorney has indicated that no ordinance is needed to begin accepting
electronic payments. Fees for such payments could be set by resolution.

5) What are some of the other communities are doing with these fees and accepting credit card payments?
        Answer: Teton County as well as many other counties in Wyoming utilizes Option 3 for
accepting electronic payments with many of them utilizing the same company. It is our understanding
that the IRS and other Federal agencies also utilize the same company as Teton County, as do many other
states. Kemmerer and Evanston utilize a version of Option 2 with a separate payment gateway (who
collects all processing/convenience fees) and payment processor.

6) What about charging a fee for a certain dollar figure $20 parking ticket v. a percentage (%) of $10,000
building permit fee?
       Answer: It is staff’s belief that having different fees or percentage costs provides unnecessary
confusion to the employees as well as to the customer. Also, this would require multiple merchant
agreements and contracts, further complicating initial setup and maintenance.

As noted in the answer to one of the above questions, Staff recommends the Town Council select Option
3 and direct staff to move forward. Should the Council provide that direction, the next steps would be:


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   1.      Finance staff would work with IT staff to research various payment processing companies,
           looking at the fees, as well as the advantages and disadvantages.
   2.      Finance staff would proceed with purchasing the electronic payment module from Caselle.
   3.      This item would be placed on an upcoming regular meeting agenda where staff would make a
           recommendation on the preferred payment processor and a contract approved.
   4.      (Optional, dependant) A resolution would be placed on an upcoming agenda whereby the fee
           for processing is set depending on the company selected.
   5.      After taking effect, staff would proceed with installation/setup of the system.

ALIGNMENT WITH COUNCIL’S STRATEGIC INTENT AND/OR TOWN’S MISSION/PURPOSE
By allowing electronic payment option to customers, the Town will be in alignment with its mission and
purpose to provide municipal services that exceed the expectations of residents, guests, and others, and to
more effectively use our resources.

STAFF ANALYSIS
The IT Dept, Finance Department, Town Clerk and Administration support allowing customers to pay
any fees, bills, etc. owed to the Town by credit card. Staff strongly encourages the Council proceed with
Option 3.

Per the above statutes, if the Town Council wishes to accept such payment and charge a processing fee,
such is authorized by statute and is acceptable to the Town Attorney.

FISCAL IMPACT
The fiscal impact of accepting electronic payments is directly tied to the Option selected by the Town Council.
Fiscal impacts are discussed under the Background section of this staff report as they relate to each of the
options. Any of the options selected will result in the purchase of the electronic payment module from Caselle
at a cost of approximately $2500 and then a minimal quarterly maintenance fee similar to the other modules we
have with Caselle. Should the Town proceed with Option 3, the fiscal impact to the Town would be minimal
beyond the initial module purchase from Caselle.

STAFF IMPACT
Staff impact associated with accepting electronic payments will also be directly tied to the option selected
by the Town Council. Staff would need to learn a new module from Caselle – this should take a minimal
amount of time as the Finance staff is very familiar with how Caselle operates. Should the Town Council
proceed with Option 3, staff will not need to spend time addressing contracts with credit card companies
and paying those associated bills. If the Town Council chooses Option 1 or 2, staff would spend more
time addressing the details of the various credit card companies we are working with to process these
payments. Should we end up with a card swipe system at the front office, this will also take some time to
learn initially.

LEGAL ISSUES

W.S. § 15-1-103(a)(xlix) states that the governing body of a Town may accept credit card payments in
payment of any tax, assessment, license, permit, fee, fine or other money owing to the Town, or in
payment of any bail deposit or other trust deposit.

W.S. 15-1-103(a)(xlix) also states that, any fees assessed for processing a credit card payment may be
borne by the Town or by the person tendering payment.



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As such, the Town Council of the Town of Jackson may approve electronic payments to the Town in
payment of any tax, assessment, license, permit, fee, fine or other money owing to the Town, or in
payment of any bail deposit or other trust deposit.

The Town Council may also approve of a processing fee for electronic payments to be borne by the
person tendering payment; or the Town can bear the cost of the convenience of processing such
transactions. If a fee is acceptable to Town Council, the amount of the fee may be determined by
Resolution in the future subject to a public hearing.

Finally, if electronic payments are to be accepted, and Option 3 is not selected, perhaps the Town
Manager, or the Town Council by resolution, should be given the authority to determine the time of
payment and the minimum amount to accept credit cards as there may be circumstances where it is no
longer desirable to allow electronic payments on certain types of payments or size of payments.

ATTACHMENTS.
None.

RECOMMENDATION.
Staff recommends the Council proceed with accepting electronic payments/credit card payments and that
they select Option 3 which is:

Option 3: The Town of Jackson contracts with a payment processor, the payment processor charges and
collects the credit card processing/convenience fee from the customer and the payment processor pays
that fee to the credit card company. Initial fine/fee is electronically transferred, with full payment details,
to the Town

This is a convenience that we should offer our customers.

MOTION.

1) (recommended option) I move to direct the Finance Staff and IT Staff to proceed with the Town
accepting credit card/electronic payments with the processing fee/convenience fee to be paid by the
customer, to proceed with purchasing the electronic payment module from Caselle, to research and make
a recommendation at a future meeting on a preferred payment processing company as outlined in Option 3
of this staff report, and to proceed with the next steps as outlined in the staff report.

OR

2) I move to direct the Finance Staff and IT Staff to proceed with the Town accepting credit
card/electronic payments with the processing fee/convenience fee to be absorbed by the Town of Jackson,
to proceed with purchasing the electronic payment module from Caselle, to research and make a
recommendation at a future meeting on a credit card companies and/or payment processing companies as
outlined in Option 1 or 2 of this staff report, and to proceed with the next steps as outlined in the staff
report.

OR

3) I move to direct Staff to further research this issue and provide additional information as requested at a
future meeting.

       OR
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No motion is necessary if you do not wish to proceed with accepting electronic/credit card payments.




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