Government Payments What You Need to Know

Transcription

1 Government Payments What You Need to Know Issue Brief: CREDIT CARD FEES AND SURCHARGES Updated January 2009 The Government Finance Officers Association (GFOA) supports the use of credit cards for payment of state and local government taxes, fines and other charges as an option for citizens and as a means of accelerating payment to these governments.

2 What Changed?

3 In-Office Transactions Tax Collectors and Treasurers Motor Vehicles, Utility Payments, Court Fines & Fees, Parking Tickets, Parks & Rec Fees, Health Departments, Senior Centers, Transfer Stations, Marinas, Golf Courses, Animal Control, Building Permits & Inspection, etc.

4 Tax Payment Program Effective October 4, 2008 (small business, real estate and other property) Old Pilot Program over - Registration in new Program Required Applies to card present or card absent transactions AND ALL CHANNELS MUST ACCEPT VISA New Interchange for Visa Debit $2.50 Maximum Visa Debit Convenience fee to citizen $3.95 Tax payment and convenience fee must be submitted and processed as two separate transactions

5 Tax Payment Program Effective October 4, 2008 Traditional Merchant Account and Credit Card Processing Terminal + 1. You calculate the convenience fee 2. You will need to swipe you citizens card twice for two separate transactions 3. You will need to reconcile the transactions 4. The fee collection will be part of your audit

6 Tax Payment Program Effective October 4, 2008 Issues with Third Party Online Systems for In-Office Transactions Outside of Taxes Visa Operating Rules Section 5.2.E.2.a DO NOT ALLOW Third Parties to assess Convenience Fees Visa and MasterCard Rules REQUIRE signatures for card present transactions (charge backs) Visa requires two separate transactions one for the tax payment and one for the fee (MasterCard Recommends) Visa requires a flat fee not to exceed $3.95 convenience fee on Visa Debit cards

7 Tax Payment Program Effective October 4, 2008 CONTRACTS Visa and MasterCard as part of Their Registration are Requiring Merchant Agreements Several Sections are not Government Friendly UCC Filings Reserve Accounts Indemnification Be careful with other venders. Some of you will soon be asked to sign (or you have already signed) a new contract replacing the old, much simpler, contract. The new contract is not government friendly and should not be accepted. The vender was very reluctant to accept a palatable contract with us pursuant to Florida government needs Mark Kiester Alachua County Tax Collector FGFOA List Serv

8 Additional Considerations for In-Office Transactions INTEGRATION Simple Flat File Import/EXPORT Direct API that 1. Automatically splits transaction 2. Avoids PCI Requirements 3. Incorporates Visa Debit BIN Database

9 New Rules Require New Technology 1. Convenience fee automatically calculated. 2. Visa Debit Cards automatically assessed a $3.95 fee 3. City /County transaction and convenience fee processed as separate transactions in compliance with Visa s Tax Program and MasterCard s Best Practice 4. Ability to void unsettled transactions 5. Ability to manage deposit accounts, departments, users 6. Online Reporting 7. Integration with existing management software

10 Political Issues We believe that credit card fees are a cost of doing business in a modern fashion and have absorbed those fees over the years. FACTS 1. By absorbing the fees you burden all of your tax payers instead of just the person choosing to use the card 2. 80% of the transaction fee goes back to the bank that issued the card to cover their risk of repayment

11 Economics Unified Government of Wyandotte/Kansas City $8.5 million in in-office credit card transactions Effective rate of 2.95% $250,000 in credit card processing costs Convenience Fee Program Citizen choosing to use a card for payment assessed 2.25% (effective rate reduced.75%) County saves $250,000/yr

12 Jim Plunkett