ST. PETERSBURG — Residents fed up paying a $2 convenience fee for paying their utility bill with a debit or credit card soon will have a new alternative.
The city plans to introduce a new e-check payment system for residents to pay bills directly from their bank account by providing their bank account number and routing code. If testing reveals no glitches, it could be introduced as soon as March, said Tammy Jerome, director of Billings and Collections.
“We wouldn’t have interchange fees that are be being passed on by Visa, MasterCard and American Express,” Jerome said. “It would save the customers money and that is a goal.”
St. Petersburg introduced the convenience fee in November 2012. At that time, fees tacked onto transactions by credit card companies were costing the city $500,000 per year, with the cost being spread across all customers even though only 22 percent of residents paid by credit or debit card.
Disgruntlement with the fee led some residents to switch to direct-deposit payments. Some even went back to the more low-tech envelope and stamp and mailed in their checks.
The result: payments using credit cards fell from 255,000 in 2012 to 215,000 last year. The fees are also added to parking ticket and red-light camera fines paid with credit and debit card.
Communities have adopted different approaches to passing on the costs to customers. The city of Tampa eliminated convenience fees in 2003 to encourage more residents to pay online,
Pinellas County, however, adds on a $3.75 convenience fee for customers who use credit or debit cards. It charges the same for e-checks. St. Petersburg residents likely will be notified in utility bill statements when the new payment option is available.
But getting more customers to switch to the e-check system may not save the city much money. The city pays a third party firm 10 cents per check to process mailed-in payments, which make up roughly one-third of all payments processed every year. That adds up to only $36,000 per year.
But it could lower staffing costs if it means a reduction in the 122,000 payments that are made in person.
Newly elected Council Member Darden Rice, who asked for the issue to be discussed at City Council this week, said the city should do more to promote online payments that will cost the city less in the long run.
“The more people can direct pay online, it saves the city money and that means taxpayers save money,” Rice said. “We should be doing a better job overall of pushing people to use that kind of payment service.”
Rice added that the Billings and Collections Department, which has an annual budget of $8.7 million and a staff of 92, could be an area where the city could make savings. About half of those staff work on processing utility bill payments, which cover water, sewage and storm water handling, and refuse collection.
“Clearly there is grist for reform in terms of having a more cost effective way to collect and pay bills,” Rice said. “It’s nothing personal against anyone but the numbers tell the story there is room for improvement.”