Archive for the ‘Accepting Credit Cards’ Category

When Visa and MasterCard changed their rules in 2008, the immediate impact was that cities and counties, including tax collectors and utility districts, could now accept credit cards in their offices at no cost, when their constituents came in and wanted to pay.  As technology was developed for this, a normal extension of that technology was to develop a simple connection to city and county property tax and utility districts databases so that users could go online and search, view and pay bills online.  Whether the users where city/county employees behind the counter or constituents at home.

At least one company, Government Payment Processing has developed a system that is standardized and allows cities and counties to implement this “Bill Presentment and Payment” technology at no cost with credit, debit and ACH and eCheck transactions also at no cost.  This functionality has always cost cities and counties a substantial annual amount and has been traditionally provided by municipal software companies.

By offering this at no cost, now, any city or county that wants to expand their online payments capabilities with bill search, view and payment can do so.  This represents a radical change and a significant opportunity for most cities and counties which do not have this capability.  If you would like some more information on this please contact me directly.

Jim Plunkett

We have seen, albeit occasionally, RFP’s for credit card processing that require the vendor to be responsible for chargebacks.  Unless you are accepting payments to guarantee a return court appearance, this is an unnecessary requirement for most government entities as chargebacks on government payments are almost non existent.

A chargeback occurs when a cardholder disputes the credit charges appearing on their monthly or online statement. The top four reasons for chargebacks are stolen cards (24.7%), counterfeit cards (23.1%), MOTO fraud (mail order/telephone order), Internet fraud (20.8%) and lost cards (14.9%). Skimming (theft of credit card numbers during a legitimate transaction) and identity theft account for most counterfeit cards, so the major reasons for all chargebacks are fraud.

Other reasons include customer dissatisfaction with the product or service and transaction errors.

In governments, the chance that someone will use a stolen card to pay their property taxes or re-register their vehicle is slim to non, yet the impact of “chargeback” protection is substantial on governments and their citizens.  While most credit card processing vendors charge “convenience fees” in the 2.5 - 3% range, those that offer “chargeback protection” have convenience fees in the range of 3.5 - 6% - or as much as $30,000 on every million dollars of transactions.

Most vendors would gladly implement 4 or 5% convenience fees to cover the risk of fraudulent transactions in governments.  I know we would, but we don’t recommend it to our clients.

Last year around this time, the New England Association of City & Town Clerks conducted a survey. The question asked was

Our Town Administrator has asked if you can let me know whether or not your town accepts credit card payments. If so, how do you handle the credit card fees? Are they charged to the customer?

Here are some of the answers

Wrentham - NO, we are still in the dark ages!

We do not do credit cards. I wish we did. Town Clerk, Otis

The Town Clerk