Credit Card Acceptance Policy Proposal

Credit Card Acceptance Policy Proposal

RECOMMENDATION:

THAT staff prepare a credit card acceptance policy for Council’s consideration.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:

I concur with the recommendation.

PURPOSE OF REPORT:

To consider a credit card payment program that would allow the acceptance of credit cards in person and online as an additional method of payment for some View Royal services.

DISCUSSION:

In the budget planning process earlier this year, Council approved an initiative that includes enhancing online services for business license and secondary suite renewals. Allowing customers to renew their business license or secondary suite permit online and pay the annual fee in one frictionless transaction enhances their experience, with the anticipated outcome of increasing compliance, reducing collection efforts and increasing processing efficiency. View Royal’s online service (iCity Online) can be set up to provide this seamless experience for customers, however, credit cards are the only method of payment accepted through this service.

Credit card payments are not currently accepted for any service provided by View Royal. Users of View Royal services have the option to pay by cash, cheque, or debit card. Constituents may also pay property taxes and sewer utility bills online if they are set up to do so through their financial institution’s online banking system. If View Royal were to accept credit cards as a method of payment, Council may wish to define acceptable aspects of the program through a policy. A DRAFT “Credit Card Acceptance Policy” is attached to this report for discussion purposes.

Why credit cards?

In today’s increasingly electronic world, a higher proportion of people expect to be able to pay for services online. Most credit card providers offer cash back and loyalty incentives further increasing this as a preferred method of payment both off and online. The use of credit cards allows individuals to manage their bill payments on a schedule that accommodates their cash flows.

In addition to enhancing customer service, the acceptance of credit cards may increase efficiency for View Royal’s administrative operations. Payments made through online services are processed through to customer accounts automatically by the system, with staff performing review and reconciliation functions. Electronic payments at the front counter are deposited directly to the Town’s bank account, again requiring only review and reconciliation by staff. Payments made by credit cards that exceed cardholder limits are rejected immediately, unlike NSF cheques that may take several days before the Town is notified of the issue. NSF payments require additional staff time for collection and processing.

Accepting credit cards as a method of payment provides the opportunity to offer payment services at the Public Safety Building for limited services, with minimal marginal costs. The concept is that by increasing customer convenience, we may increase the efficiency of collecting for certain services like municipal tickets, business license and secondary suite fees and other small dollar items.

Fees

View Royal may accept credit cards by entering into an agreement with a payment service provider. This service is provided for fees estimated at between 1.9% and 2.3% of the transaction dollar value. While these fees are normally considered the cost of doing business, Council may wish to manage costs by limiting the services for which credit cards will be accepted and/or limiting the dollar value that may be paid by credit card. Payment service providers do not allow merchants to add the cost of credit card fees to the amount of the transaction, or to discount other methods of payment to disincentivize the use of credit cards.

The attached draft policy proposes specific eligible services for which credit cards may be accepted. This list notably omits all services that are typically higher in dollar value – property taxes, sewer utility fees, building and development permits, development cost charges, and security deposits. Payments for these services would continue to be restricted to cash, cheque or debit card only. Based on anticipated revenue, if the attached draft policy were to be adopted with the eligible services as listed, estimated fees would be in the range of $2,000 - $4,000 annually, assuming between 75%-90% utilization of credit cards for most eligible services. These fees may be partially offset by reducing fees associated with the payment method they replace (cash and deposit bank charges, NSF fees, etc).

Security

View Royal is obligated to comply with Payment Card Industry Data Security Standards (PCI DSS). We can ensure compliance by using a PCI DSS compliant service provider and by prohibiting the acceptance of credit card numbers over the phone or by any electronic means, other than the online service provider. Credit card numbers and associated information are not stored in any of View Royal’s systems and are not printed in full on receipts.

Comparatives

A brief survey online indicates that half of the other municipalities in the CRD accept credit cards for at least some services (Colwood, Esquimalt, Oak Bay, Saanich, Sidney, and Victoria). None of these municipalities accept credit card payments for property taxes, but customers may be directed to other service providers that accept credit card payments and then pays the municipality on behalf of the customer, normally for a fee. Most offer online payment services (with credit card payment option) for utilities, business licenses, dog licenses, parking and other municipal tickets.

Alternatives

RECOMMENDATION:

THAT staff prepare a credit card acceptance policy for Council’s consideration.

SUBMITTED BY: D. Christenson, Director of Finance

REVIEWED BY: K. Anema, Chief Administrative Officer