Passing along card fees a terrible idea
The Modesto City Council should reject the nickel-and-dime-you-to-death plan hatched by staff to “recover” bank fees. It’s a bad idea certain to enrage more than a few Modesto residents – the ones who have to pay it.
Eventually, just about everyone could be hit with some kind of fee.
The city is considering a plan to recoup fees that banks charge on credit and debit-card payments. Private businesses are prohibited from charging such fees, but cities, counties and the state are not. Modesto’s plan is to start with payments for permits, business licenses, recreational classes and all other city services except utilities and parking fees.
Years ago, when cities began accepting debit- and credit-card payments, it wasn’t merely because those payments were more convenient for people doing business with cities. It was also more convenient for the cities. Staff no longer had to worry about opening so many envelopes, filing checks, or tucking cash into a drawer. Payments were recorded directly into appropriate accounts, making tallying the figures easier.
The fees charged by credit card companies were, in part, payment for services being performed on the city’s behalf – those tasks of opening envelopes, counting the money, tracking it at the counter, putting it into a ledger. Those costs – including staff time – were built into the cost of the permits themselves.
We think they still are.
By asking people to pay credit-card fees, the city is essentially asking us to pay them twice. That’s not fair, and it’s not always cheap.
A schedule of Modesto Building Safety Division fees shows residential fees ranging from $15,256 (new building with interior improvements) to 26 cents (per $1,000 valuation of a project).
Say you want an extension on your project’s timing; that’s going to cost you $1,277, according to the schedule. But if you pay by credit card, it will cost you $1,307, thanks to the 2.4 percent surcharge. If a farmer wants to cancel Williamson Act status on her property, that costs $1,962, unless she pays with plastic; then it’s $2,009.
It’s not as if these costs are new; banks have been charging them for years. That’s why legislature in nine state have a acted to make it illegal for private business to pass along the extra charges.
Worse, the city is already exploring how to extend flat payment fees to those who pay their utilities bills by credit or debit card. Don’t forget, sewer rates are going up by 32.4 percent over the next few years. We’re also in the midst of a program that will nearly double water rates in five years.
The city is considering adding maybe a $3 flat fee if you pay your utility bill (for water, sewer, garbage pick up) by bank card. And they’re calling it a “convenience fee”? “Inconvenience” fee is more like it.
The council should reject anything resembling a payment fee. If the city can’t afford to pay the bank fees, or doesn’t think there’s value there, then it should accept only direct electronic transfers, checks or cash from residents.
We believe the city will realize that limiting how it accepts payments will actually prove more expensive in the long run.
Tacking on penny-ante fees gives a city – or an airline or a bank or a phone company – a bad reputation. It’s a reputation Modesto doesn’t need.
This story was originally published July 10, 2017 at 5:23 PM with the headline "Passing along card fees a terrible idea."