AGENDA TITLE:
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Presentation on Credit Card Convenience Fees: Discussion and Council Direction - Follow-Up to February 4, 2026 Council Meeting (IS - FIN)
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MEETING DATE:
April 15, 2026
PREPARED BY:
Tarra Sumner, Revenue Manager
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RECOMMENDED ACTION:
Presentation on Credit Card Convenience Fees: Discussion and Council Direction - Follow-Up to February 4, 2026 Council Meeting.
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BACKGROUND INFORMATION:
The Finance Department, through the Revenue Division, requests the City Council’s direction regarding the City’s handling of credit card payment processing fees. Currently, the City absorbs all fees associated with credit card transactions. While this approach simplifies payment for residents, it has resulted in a significant increase in processing costs. Over the past year, credit card fees have risen substantially, largely due to interchange and bank processing fees.
As requested during the February 4, 2026 Mid-Year Budget presentation, Revenue staff will report on the current operations and costs associated with convenience fees. The presentation will provide:
• Comparisons with neighboring cities to provide context,
• Options for the Council on implementing convenience fees, and
• Staff’s recommendation based on analysis and best practices.
This review is intended to provide Council with the information needed to make an informed decision regarding the management of convenience fees.
The City maintains a structured monthly collection process consisting of collection procedures and continued diligence in recovery efforts. However, many other cities and municipalities also choose to pass these costs directly to the customer at the time of payment, typically as a flat fee or a percentage of the transaction. Adopting a similar approach could help offset rising costs while maintaining transparency and fairness in billing.
Staff are seeking Council input on whether the City should continue to absorb these fees or implement a policy where customers are responsible for credit card processing costs. Staff will provide examples of fee structures used by comparable cities and discuss potential implementation options.
City staff is requesting Council guidance on this policy matter to ensure the City proceeds in a manner consistent with Council priorities and the City’s financial sustainability.
FISCAL IMPACT:
Currently, the City absorbs all credit card processing fees, totaling approximately $1.3 million annually. Transitioning to a convenience fee model would shift these costs to the customer, reducing the City’s operational expenditures by a similar amount, while maintaining the ability to process payments electronically. The exact fiscal impact would depend on the fee structure approved by Council and anticipated customer usage of credit card payments.
FUNDING AVAILABLE:
Currently, credit card processing fees are budgeted out of each department’s respective budget.