• October 20, 2014

City council discusses credit card processing surcharge

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Posted: Wednesday, February 16, 2011 12:00 pm

By Anthony Scott

Killeen Daily Herald

At a Tuesday workshop, Killeen City Council members took issue with credit card processing fees for high-dollar customers who, under proposed rules, would cost the city money.

A $1,000 credit charge costs about $15 for the city to process. At the same time, Killeen is bound by law to charge a flat $2 fee for the transaction, leaving it to make up the difference.

"Why should the $30 water bill of the person on a fixed income pay $2 when it really costs them 60 cents?" Councilwoman JoAnn Purser said.

Under the proposed city law, credit charges less than $40 will be given a 5 percent service charge. However, when charges exceed $40, the city is limited to charging a reasonable amount. Killeen is proposing a $2 charge as its reasonable amount, regardless if it costs the city more.

Purser said the city should recoup all fees and disperse the cost equally throughout credit users.

However, City Attorney Kathy Davis said this was not possible and that the city is limited by local government codes and Visa rules. The processing fee the city charges must "reasonably" relate to expenses incurred by the municipality in processing.

"It doesn't cost our employees any more to process a $1,000 charge than it does to process a $2 charge," Davis said. "So that's one reason we're charging the fee and it has to be consistent."

Davis also said the Visa rules, which say the service fee has to be the same for everyone, also limits the city.

"I think if somebody is costing a $1,000 on a credit card, they should pay $15," Purser said.

Council will vote on the proposed rule change at its next regular meeting on Tuesday.

"I think the question is should we subsidize the large sum user?" Councilman Ken Wells said. "The person with a $1,000 charge is actually being subsidized."

City Manager Connie Green said the city had its bank research the cost of tickets and the processing fees. The average ticket was $81.71 and the average cost per transaction was $2.04.

"They're charging us $15 for a $1,000 fee and $2 for a $40 fee," Wells said. "The person with the $40 fee is subsidizing the person with the $1,000 fee. It's somewhat unfair."

Contact Anthony Scott at ascott@kdhnews.com or (254) 501-7568. Follow him on Twitter at KDHcity.

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