You may have read my previous email regarding Visa’s New Rules and  7 Counties in Florida that have chosen not to accept Visa in their offices.    Some of those counties chose not to accept Visa because because their vendor was making them sign a merchant agreement that was “outrageous” as described in detail in this Palm Beach Post article.

As Visa’s and MasterCard’s rules have changed, many vendors haven’t.  Non-government friendly “merchant agreements” are traditional merchant agreements designed for retailers (merchants) and include components that allow the payment processor to 1) hold your funds in a reserve account and 2) put a lien on those funds and 3) place all of the financial liability related to the transactions on the merchant (in this case the county).

While Visa now requires a separate merchant account in their New Tax Payment Program rules, payment processors are the ones that set the terms of these agreements.

Having been involved in this government in-office convenience fee market since it’s inception, we listened to cities and counties and have developed a government friendly contract merchant agreement that addresses issues that are not palatable to governments. We also have developed a solution that allows you to accept credit cards in your office, online, over the phone, even integrated into to your software, at absolutely no cost andwhich is compliant with all aspects of the Visa Tax Payment Program.

So…the bottom line is you do have a choice. Make sure at the very least, before you sign an agreement, there is no termination penalty.

If you would like more information from us please contact me directly.

No less than a half a dozen tax collectors in Florida have announced they will no longer accept Visa  since May. Their credit card processor has told them Visa will no longer allow them to accept credit cards and assess a fee back to their citizens.  Visa DOES allow a convenience fee to be assessed back but has specific regulations for both online and in-office transactions.

For ONLINE transactions, that are not tax payments, Visa CAN be accepted with a convenience fe assessed back to the citizen as long as it is a fixed fee regardless of the transaction amount and it is assessed by the city or county …not a third party.  This of course negates about 98% of the online payment scenarios in place because they are run by third parties. Since the convenience fee also must be a FIXED fee and the transaction costs assessed by MasterCard and Visa are percentage based, having a fixed fee is only feasible when you have a good handle on the average transaction amount…like utility bills.

For in office tax payments, Visa can also be accepted with a convenience fee assesed to the citizen, however, certain conditions must be met.  First, the convenience fee must be submitted and processed as a separate transaction and secondly, Visa consumer debit cards must have a “different” incentive convenience fee.  To do this automatically requires an investment in technology that most companies have not and may not be wiling to take.

To add to this conundrum, Tax Collectors in Florida often collect DMV payments in their offices and Visa presently does not allow a convenience fee to be assessed on these payments.

The bottom line is Visa does allow a convenience fee under certain conditions.  these conditions may require special technology from uour solutions provider…make sure you ask.

There is much information and misinformation circulating regarding Visa’s New Tax Payment Program that I would like to comment on:

The new Tax Payment Program effective October 4, 2008 replaces the old Visa Tax pilot program which has concluded.

Registration in the new program is REQUIRED if you or your third party provider is assessing a fee back to citizens on Tax Payments made with a Visa Card.

The Program applies to Online as well as In-Office, Over the Phone and In the Mail transactions.

Variable (percentage based) fees are allowed Except on Visa Debit cards where a fixed fee ONLY must be applied and must not be greater than $3.95 (Visa has established a new interchange rate of $2.50 for payment processors).

The convenience fee transaction and the County/City Fee transaction MUST be submitted as separate transactions.

Most if not all Third Party Service Providers DO NOT comply with these rules. Make sure when you are considering implementing a Tax Payment Program that you ask your solutions provider about the above requirements.

IF YOU WANT A COPY Of Visa’s new Tax Payment Program rules please Click Here

It’s the Economy Stupid

This phrase was widely used during Bill Clinton’s successful 1992 presidential campaign. In order to keep the campaign on message, James Carville hung a sign in Clinton’s Little Rock Arkansas Headquarters to keep the campaign staffers focused. Although the sign was intended for campaign staffers the phrase became a national sensation and is largely considered to be the reason for Clinton’s win.
This past Monday, as I presented to the Wethersfield Town Council, several citizens voiced their concerns to the council that they were not being pro-active enough with regards to to how they were handling the towns money. The

point being that most municipalities citizens are demanding accountability.
Municipalities are not the only ones facing hard decisions. Headlines in this past Septembers Contra Costa Times included Large Numbers of Alameda, Contra Costa Taxpayers Bail on Property Tax Payments. In Alameda County,

property owners failed to pay more than 25,000 property tax bills totalling nearly $115 million, while just north in Contra Costa County a record number of homeowners failed to pay their property taxes last fiscal year, costing that

county $116 million.
Many citizens want to use their debit or credit cards for payment but most cities and counties are not offering them the option.
Accepting credit cards can help both your citizen, by offering them another method for payment and also your office, by reducing collection efforts. In fact Contra Costa County began accepting credit cards using a convenience fee

program, this fall, to try and improve their collection.
If you do decide to accept credit cards in your offices you certainly don’t want to be explaining the transaction fees in your budgets to your citizens since the majority of them are not paying by credit card. Your only really defensible

solution is to offer card acceptance AND to put the burden of the transaction cost on the citizen that CHOOSES to use their card for payment.

When I get contacted by people that read my articles, receive emails from us or that hear about us, the MAIN thing many city and county managers and treasurers don’t realize is that they can now accept credit cards for people that walk in to their offices, and have the transaction fee assessed back so accepting credit cards in their offices will cost them nothing. This is the bigest new component of the credit card company convenience fee program changes of last year.

Third Party Service Providers are not promoting these changes to their customers, because for the most part, their solutions are “awkward” at best and usually noncompliant with new credit card company rules for in-office transactions.

Credit card companies require a signed receipt for in-office transactions. Visa also requires the convenience fee and the city/county fees be submitted and processed as separate transactions and Visa has a special rate for Visa debit transactions.

Because Third Party Service Providers designed their systems for unsecured online transactions and 10 year old convenience fee rules, you will want to make sure wahtever solution you decide to use is compliant.

What is a Fair Rate For Your Citizens?

All Payment Processors have the same wholesale transaction costs regardless if they are Bank of America or a small local merchant services provider. These costs are called interchange and are assessed by MasterCard, Visa,

American Express and Discover. Local governments get special interchange rates. These rates do however vary based on card brand, card type (credit or debit) and method of payment (in person, over the phone, online) and the size

of the transaction. So to offer your citizens a consistent percentage an estimate of the variables above needs to be made.

Municipal processing wholesale costs average around 1.6 - 2.1% depending primarily on volume and card types (number of corporate cards). If you are being offered a rate lower than 2% you either are being mislead (you are actually

being charged more) or your payment processor has for some reason agreed to assume some of the cost (maybe they are making money on other services to you).

Over this past year, significant changes in credit card rules for Municipalities have occurred. Now you can begin accepting credit cards in your offices and assess the fee back to your citizens. If you are like 95% of the towns in the U.S.,

this is a big deal.

Your citizens have…for years…been asking for you to accept credit cards for payment but you haven’t been able to budget the costs. Now you can!

RULE NUMBER 1

Make Sure You are Working With A Company That Understands the Complexities of the New Convenience Fee Programs and Also What You Need for Your In-Office Transactions

Visa, MasterCard and American Express don’t play well together yet when you decide to accept credit cards you will need a processor that helps you work with the continually changing (every October and April) credit card company

rules.

The credit card industry is a vast ocean of mis-information because the barrier to entry for sales organizations of credit card processing services is minimal.

This can be your single BIGGEST MISTAKE! Most Banks, Processors and Third Parties do not understand the new rules nor the issues and will try and sell you a system designed for a retailer or for online transactions.

To see more on this, please click on one of the publication links to the left and do not hesitate to contact me directly by Clicking Here with any questions

County offers five methods to pay property taxes

Tax OfficeThe Douglas County Treasurer’s Office mailed out property tax statements this January that can be paid in person; by mail, drop box, or telephone; or online.

Tax collectors are now, more than ever, seeking to provide as many alternatives for payment of property taxes as possible to increase their collections. With changes in credit card rules allowing cities and counties to now accept credit

cards at no cost to them, many municipalities cannot afford not to implement credit card acceptance in their offices any longer.

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