Last year, the City of Walla Walla spent more than $900,000 on credit and debit card transaction fees, out of a total budget of about $131 million.
The city pays these so-called swipe fees whenever residents use their credit or debit cards to pay for things like utility bills, building permits or swimming lessons.
As more people pay their bills online, the city’s fees have also increased. Just four years ago, the city paid only about $352,000 in fees.
“I was quite surprised at the costs we have incurred as a city,” said Mayor Pro Tempore Steve Moss at a July 22 working session of the city council“The big question for me is how we can reduce the amounts we pay while remaining fair to our customers.”
While most providers’ swipe fees range between 2% and 4%The city pays an average fee of 5.6% on its card transactions.
Officials attribute this to a lack of competition: Walla Walla’s online portal lists only two payment processors to choose from. As Liz Moeller, the city’s finance director, said at the same work session, “There’s not a lot of room for negotiation when there are only two players in the game.”
Nevertheless, Moeller recently made plans to switch to the other payment processor, which could potentially save the city 20 to 30 percent of its swipe fees.
The city council is also considering introducing a processing fee that residents would have to pay when paying for city services with a credit or debit card. How high this fee should be is up for debate: the council has discussed fees between 2% and 5.6%.
While no one likes additional fees, City Manager Elizabeth Chamberlain believes this is the best way forward.
“Are we being responsible with taxpayer dollars? When we spend nearly a million dollars a year on credit card fees? Probably not,” she said. “We should think twice about spending that much money on a convenience.”
Under the current system, Chamberlain said, city taxpayers subsidize the portion of Walla Walla residents who use credit cards.
For example, the majority of the city’s swipe fees are collected from customers paying their utility bills. Only about half of the city’s electricity customers pay by card.
By charging a processing fee, officials say, customers can continue to use a card – and potentially earn credit card rewards or miles – without everyone else having to pay.
“That would be fairer to the people who are taking the money out of their bank accounts,” said Councilman Rick Eskil at the work session. “Because you’re basically subsidizing these people for their miles.”
When residents pay by bank transfer, the city pays a flat fee of $1.25 that it does not pass on to the customer. To make this option more attractive, the city recently introduced Interim invoicewhich allows customers to pay a fixed monthly amount for water throughout the year.
Charging swipe fees could also reduce the likelihood of future utility tariff increases.
“We’re locking in our utility rates for six years,” Chamberlain said. “Maybe we won’t have to raise rates as much in the next round because we’re not subsidizing credit card fees.”
Chamberlain expects the City Council to vote on the issue soon. If a processing fee is approved, it could be implemented a few weeks later.
