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<br />~ <br /> <br />2- <br />/],\~HILLS <br /> <br />MEMORANDUM <br /> <br />. <br /> <br />DATE: <br /> <br />November 22, 2004 <br /> <br />Agendaltem 7.A <br /> <br />TO: Honorable Mayor and City Council <br /> <br />FROM: Murtuza Siddiqui, Finance Director/Treasurer "'\1.( <br /> <br />SUBJECT: Credit Card Acceptance - Vendor (Processor) Selection <br /> <br />BACKGROUND: <br /> <br />Currently, the City of Arden Hills does not accept credit card payments for its services. Services <br />that can be paid by credit card include permit fees, licenses, utility payments, fines, sports <br />recreation registration, etc, Over the past year, the City has received a number of inquiries from . <br />the residents and contractors encouraging us to accept credit card payments. <br /> <br />Credit cards are accepted by most cities in the metro area, but the type of services they accept <br />payments for vary from city to city. There are two methods of accepting credit card payments. <br />The first method is the Over the Counter method where a card is either swiped through a credit <br />card machine or the information is manually inputted when it is provided over the telephone or <br />through some other means. The second method of accepting credit card is on-line. <br /> <br />The first method as outlined above is fairly straight forward to implement. There is a one time <br />set up fee of approximately $600. However, there is an on-going per transaction fee associated <br />with the usage. Each time a credit card payment IS accepted, a service fee is charged by the credit <br />card company. This charge will vary anywhere between 1.8 and 2.5 percent of the charged <br />amount depending upon the type of entry, Lower charges are applied if a card is physically <br />swiped through the machine as opposed to manually inputting the card number, The credit card <br />company charges a higher fee for manual input due to risk factors. There is a minimum monthly <br />usage fee of$25. <br /> <br />Staff estimates that initially 15 to 20 percent of the revenue normally received by checks will be <br />through credit cards. Based on this estimated percentage, the City may collect $500,000 to <br />$660,000 at an annual cost of$12,500 to $16,500 to the City. <br /> <br />Visa and MasterCard agreements prohibit charging a credit card customer a fee for using the . <br />credit card, therefore, the service fee charged by the credit card company cannot be passed on to <br />