AgdaPkt 2008-02-11 Clsd and Reg - Laserfiche WebLink

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6.18 Page 1 ~II'"''''''''''':::'''''''':''''''''<>''''\?''''''''''''' . '...",...._'~..""'..;.B.'....' : ,-,- c .~ "..'c- -.".- ..,....:' .- ~ - ,,""--". ;: \"" ~. ;;::.::':-:[. ~Y(7, ":.::::<; .:i : .,",----------., :...-,;..... "., ....,..".,'......'.........'....:',..'.... ..............,..........:..ii:..:.......r.....ii,.r#~,\J~~.;IfI~i~~~J~:M~I~~';~~.u:..:, .... .... ' '. .... '..'.'. ....... ............ .....,.'\... .... .........:. ......';.:y:.RIfQI,I.;~Jj'liti February 11, 2008 SUBJECT Wells Fargo Bank Merchant Card Services RECOMMENDATION Authorize the City Manager to execute a contract with Wells Fargo Bank for the provision of merchant card services. BACKGROUND The City has accepted payment by credit and debit cards for over 10 years. Although there is a cost of doing so, the City adopted this payment method in response to requests from those who do business with the City as paying by credit or debit card is a preferred method of payment for many people and businesses. Presently the City accepts credit and debit card payments for utility services, development fees, recreation classes, parking fees, and library fines. The total annual transaction volume is about $7.9 million. The annual cost to the City for accepting credit and debit card payments has been escalating in recent years due to the increased popularity of this payment channel. This is particularly evident in situations where residents or businesses desire to pay for services via the internet. The total annual cost to the City to accept credit and debit card payments (merchant service fees) is about $190,000 annually. This cost is distributed primarily to the water fund, sewer fund, parking fund, or general fund depending upon the service being provided. The current fee paid by the City is 2.34% of the value of each transaction with some slight rebates returned to the City depending on the nature of the card used. This fee includes Wells Fargo's mark.up, plus fees charged by VISA and MasterCard that are passed through to the City. The latter fees are set by VISA and MasterCard and are non.negotiable. The only portion of the fee that is negotiable is the mark-up charged by Wells Fargo. Given the relatively high cost of this service, staff approached Wells Fargo Bank, the bank providing these services, and has been able to negotiate a lower processing fee that is based upon pricing that Wells Fargo provides to the State of California. This pricing was provided to the state under a contract that was initially executed in 2002 and which was extended in February 2007 to June 2008. Under the new pricing being offered to the City, the City will be charged 0.23% by Wells Fargo plus the costs from VISA and MasterCard that Wells Fargo passes through to the City. The estimated net affect of the proposed pricing will be a savings of approximately $36,000 annually, or 19% below the current cost.