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City panel backs covering credit card fees on utility bills

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Rich Olson responds to questions during the Elizabeth City Council Town Hall at the Arts of the Albemarle, Monday, September 18, 2017.

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By Jon Hawley
Staff Writer

Sunday, July 22, 2018

Elizabeth City officials are proposing the city cover processing fees when utility customers pay by credit card, in a small benefit to customers that could cost the city about $54,000 a year.

In its finance committee meeting Thursday, the city council gave preliminary approval to hiring Wells Fargo as the city's credit and debit card processing vendor – and to no longer pass processing fees along to customers. The committee voted 5-2 in favor; a binding vote is slated for Monday's regular session at 7 p.m. in city hall.

During the meeting, City Manager Rich Olson and Finance Director Suzanne Tungate explained why they're recommending hiring Wells Fargo. The city's current card processing company, Online Payments, is proposing to raise its fees, and so they decided to shop for a better deal for customers.

Six companies provided quotes, with Wells Fargo offering the best rates at $1.09 for processing electronic checks and bank drafts and $2.84 for processing a credit or debit card payment, they reported.

Wells Fargo's proposal also provides the city would pay the processing fees, not customers. Olson estimated that could cost the city about $54,000 a year. He argued it would be in the city's interest to do so, however.

“By paying this fee on behalf of customers, we should see some savings in the customer service area,” Olson said. He explained that paying the fees would encourage customers to pay online or over the phone, reducing traffic at the city's customer service offices and saving staff time.

The memo he provided council estimated the reduced staff time would equate to a $15,225 savings. The memo also notes, however, that the city is aiming to double the number of customers paying by card in the next three years, helping cover more of the processing costs.

Olson and Tungate also explained it's more expensive for companies to charge customers fees versus charging all of them to the city; had the city hired the firm with the lowest “customer pay” rates, customers would have paid almost $78,000 in fees in 2017, they estimated. The city processing those 2017 fees through Wells Fargo would've only cost about $45,000, they added.

Councilor Johnnie Walton took issue with the city paying processing fees, however. Customers who pay by credit or debit card tend to economically better off, Walton argued, and so could afford the extra fees. The city paying would do nothing to help lower-income customers who tend to pay their bills with cash, he argued.

“Who are you looking out for?” Walton asked.

Olson agreed that lower-income customers tend to pay in cash, but argued the city paying would reduce operational costs and wait times at customer service offices. Those benefit all customers, he argued.

Walton remained unconvinced, and he and Councilor Gabriel Adkins voted against recommending the council hire Wells Fargo. Voting in favor were Councilors Jeannie Young, Anita Hummer, Billy Caudle, and Mayor Pro Tem Rickey King and Mayor Bettie Parker. Parker is only allowed to break ties during council meetings, but may vote normally during finance committee meetings.

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