BRIGHTON — City of Brighton utilities customers who pay their bill with credit cards may be charged a convenience fee to do so next year.
Finance Director Dan Frelund went over a proposal of what the implementation of such fees would look like for the city during its Sept. 10 study session.
As Frelund explained, there are two models of paying fees charged by credit card companies: an absorbed fee model where the city absorbs the fees as “a cost of doing business,” and a convenience fee model, where the customers are charged a separate disclosed fee by the credit card processor. The absorbed fee model is currently in place, with the credit card fees coming out of the utilities budget.
According to Frelund, the utilities department paid $29,263 in fees to credit card companies in 2011, $53,447 in 2012 and has paid $31,480 in fees as of Aug. 31. He pointed out the amount the city has to subsidize is growing as more people use credit cards and that implementing the fee would be a savings for the city.
“Instead of the city paying the fees, the credit card processor will pay the fees out of the convenience fee thy collect,” he said.
Frelund said the convenience fee could be charged as a percentage — possibly 2 to 2.5 percent — or as a set fee. He said both options will be built into the utilities department’s new billing software, which isn’t expected to go live until the first quarter of 2014.
Councilmembers had mixed reactions to the prospect of implementing convenience fees on residents. Councilmen Kirby Wallin and Chris Maslanik voiced opposition to the fee while Councilwoman Cynthia Martinez, Mayor Pro Tem Wayne Scott and Mayor Dick McLean voiced support for a fee.
Councilman Rex Bell said he did not like the prospect of people going further into debt by paying utility bills with credit cards or using them specifically to earn rewards offered by credit card companies.
Maslanik said he wouldn’t vote for the convenience fee, saying that it’s just part of being in the business of providing utilities.
“I just don’t want our customers to feel like we’re nickel-and-dime-ing them,” he said.
Scott said when he sees the costs the utilities department has to pay, he’s in favor of moving forward with the convenience fee. McLean said he would be in favor of the convenience fees as he doesn’t like to see this much of a hit to the utilities department’s bottom line.
In addition to the convenience fee for the utility bills, the city is also considering implementing a convenience fee for businesses who pay their sales taxes with credit cards. Frelund said it’s possible that fee could be in place by the end of the year.
The idea of a convenience fee came up during the 2013 budget process where council requested staff to look into the issue.