The convenience of paying the City of Dothan with a credit card has been a little too convenient, so residents who use a credit card for transactions may be asked to absorb most of the cost.
The Dothan City Commission will be asked to approve a request by the city clerk and finance department to assess a fee for each credit card transaction done with the city. The suggested fee would be 1.6 percent of the gross amount owed. For instance, a resident whose utility bill averaged $200 per month and paid with a credit card each month would pay an additional $38.40 annually.
If approved, the fee would apply to all credit card transactions with the city.
City Finance Director Angela Palmer said the city must pay the credit card companies for their services, and residents’ credit card use has been so popular, the city can no longer absorb the cost.
In 2006, the city collected utility payments totaling $440,000 from credit card transactions and paid $7,236 in fees to the credit card companies. However, the number of residents using credit cards to pay the bill has skyrocketed since the city made online payments available. In 2009, the city collected utility payments totaling $10.6 million and paid $237,000 in fees to the credit card companies. Palmer said she negotiated a lower rate with the companies in 2010, but credit card use continues to rise and the city has already paid $214,000 in credit card fees this year.
The 1.6 percent fee would cover about 98 percent of the city’s costs under the new negotiated rate with the credit card companies. The proposal would also assess a $25 fee on all returned items including checks, bank drafts and credit card transactions.
The commission moved the request forward at its regularly scheduled meeting Tuesday and is expected to vote on the matter at its Nov. 3 meeting.
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