Covington to abolish credit fees

COVINGTON — Utility customers of the city of Covington will soon no longer pay a convenience fee when they pay their bills with debit or credit cards.

The City Council agreed Monday night that the city will now absorb the processing cost. The decision was made due to regular complaints from customers about the 2.95 percent fee applied to each transaction, according to City Manager Steve Horton.

According to Bobby Johnson, information systems manager for the city, from July 30, 2009, through July 30, 2010, the city collected 6,375 credit and debit card payments for a total of $1,292,188.18. A 2.95 percent convenience fee per transaction fee added $38,207.03, for a total of $1,330,395.21.

The city uses a company called Collector Solutions Inc. out of Pensacola, Fla., to process credit/debit card payments. The company is offering a price break for customers processing utility payments, Johnson said.

"Currently the transactions get electronically sent to Collector Solutions Inc., at which time the convenience fee gets applied, then the payment is sent to the appropriate financial institution," Johnson said via an e-mail response to questions. "Once the City of Covington starts absorbing the convenience fee, the transaction will be sent directly to the customer's financial institution, which will simplify the process and reduce overhead for Collectors Solution Inc. The agreed upon amount for the convenience fee, if the city of Covington absorbs the convenience fee, is a flat fee of $2.95 per transaction which gets billed monthly to the city of Covington."

Based on the numbers for July 30, 2009, through July 30, 2010, the cost to the city to absorb the fees for that year would be $18,806.25, some $20,000 less than what customers paid in fees.

Johnson said it will likely be a month or so before the change goes into effect, as the city attorney will need to review any associated legal documents and the mayor will need to sign off on the final agreement.