HomeMy WebLinkAboutFIN 17-23
Report to Council
Report Number: FIN 17-23
Date: September 25, 2023
From: Stan Karwowski
Director, Finance & Treasurer
Subject: Convenience Fee for Online Collection of Building Services Fees
- File: F-2000-001
Recommendation:
1. That Council provide authorization for the City to charge a convenience fee for online
transactions for Building Services through the Pickering Residential Interface & Service
Modernization (PRISM) portal;
2. That Council authorize the Director, Finance & Treasurer to set and adjust the
convenience fee as required for optimal cost recovery of online for current term of
Council; and
3. That the appropriate officials of the City of Pickering be authorized to take the necessary
actions as indicated in this report.
Executive Summary: Staff are recommending Council authorize a convenience fee be
charged when applicants make an online application and payment for Building permits through
the City’s new Pickering Residential Interface & Service Modernization (PRISM) online
application portal.
This new application portal, currently under deployment, allows for residents and other users to
apply, make direct online payments, and receive digital services through upgrades to the
AMANDA database software for Building permits.
The introduction of this convenience fee is to help recover the merchant fees that will be
incurred on these Building permit fees that are processed through the portal.
Financial Implications: When a credit card transaction is processed online, the payment
processor (merchant), charges the City a merchant fee for each transaction. The City’s
implementation of a convenience fee to the customer will allow the City to recuperate this
expense.
The planned credit card (VISA and MasterCard only) fee, typically known as a “convenience
fee” for online transactions, is only intended to allow for cost recovery; the intent is not for the
City to make a profit from these fees.
FIN 17-23 September 25, 2023
Subject: Convenience Fee for Online Collection of Building Services Fees Page 2
The City is recommending setting the convenience fee at 2.65 percent and the maximum
allowable transaction value at $20,000. After the first year of implementation, the City will
review the data and will adjust the fee if deemed necessary. In other words, if the merchant
fees incurred by the City are significantly greater than the convenience fee received by the
City, then the City may increase the fee percentage, and vice versa.
Below Table Demonstrates the Logic of this Process
Payment in PRISM portal by credit card
Customer Transaction: Allocated to:
City Permit Fee $ 100.00 City revenue account
Convenience Fee (2.65%) 2.65 Misc revenue account
Total Collection $ 102.65 Remitted to City
Merchant Fee $ (2.65) Financial Service Charges
City Net Position $ 100.00
The convenience fee collected from users will be booked to a revenue cost recovery
account. The merchant fee is booked to the Financial Service Charges account. These fees
will be monitored for the first year of operation to assess whether the service fee charged by
the City should be adjusted. The segregation of these fees will allow City staff to review the net
position of the cost recovery, and allow City staff to adjust the fee percentage charged to
customers, as required, to allow for optimal cost recovery
Discussion: It is important to note that the convenience fee is not a revenue generation
tool for the City. The charge is to help offset the merchant fees that are charged on those
credit card transactions. The City will be capping the online transactions on the portal to a
maximum of $20,000 per transaction to mitigate risk of fraud and fluctuating fees.
Every credit card transaction processed by the City in curs merchant fees which range from
1.65% to 4.00% of the transaction value depending on the type of card and what cardholder
perks may be attached to the card. The City has accepted this as a cost of doing business to a
certain level. However, the City currently has in place a maximum dollar limit for credit card
payments and has also exempted some City services from being paid by credit card in an
effort to minimize the merchant fees incurred by the City. With the introduction of the online
portal for processing and payment of Building Services revenue collection, a maximum dollar
limit has been set at $20,000 along with the introduction of a convenience fee of 2.65% to help
offset some of those costs incurred. Both the convenience fee and the merchant fees for
transactions processed through the portal will be charged to the Building Services cost centre.
FIN 17-23 September 25, 2023
Subject: Convenience Fee for Online Collection of Building Services Fees Page 3
These fees will be monitored for the first year of operation to assess whether the convenience
fee charged by the City should be adjusted.
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Kristine Senior Stan Karwowski
Manager, Accounting Services Director, Finance & Treasurer
Original Signed By:
Kyle Bentley
Director, City Development & Chief
Building Official
Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Chief Administrative Officer