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HomeMy WebLinkAboutCL 31-02 Clt'! a~ REPORT TO THE 123 Finance & Operations Committee Report Number: 31-02 Date: September 11, 2002 From: Bruce Taylor City Clerk Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Service Contract for E-government Service - "PayTickets" Paying Parking Tickets On-line File: A-3230 Recommendation: 1. That Clerk's Report CL31-02 regarding the service contract for "PayTickets" be received. 2. That Council endorse the concept of e-government service for paying parking tickets on-line. 3. That the City Clerk be authorized to enter into a service contract with the Royal Bank of Canada and Teranet for the e-government service for paying parking tickets on-line. Executive Summary: In June 2001, the Royal Bank of Canada (RBC) and Teranet showcased their new e-service solution "PayTickets" at the 2001 AMCTO Annual Conference. The service provides municipalities with the ability to offer our clients the option to pay their parking tickets on line. The Town of Oakville launched the PayTickets pilot project in February 2002 and since that time has gained a 10% - 16% usage rate of this service. In November 2001, the City of Sudbury also launched a similar service, which was developed, and is maintained, in-house. According to reports from both municipalities, these services have proven very successful. Staff from our IT, Finance and Clerk's areas have worked with representatives from PayTickets over the past several months to investigate the merit in offering this service to the City of Pickering's clients. As well, staff have discussed the service with contacts from both the Town of Oakville and the City of Sudbury. Our research indicates that the City of Pickering is well positioned to offer our clients a new and innovative payment option that is convenient, quick, and secure at a minimal cost. It is worth noting that 124 Report CL 31-02 Date: September 11, 2002 Subject: Service Contract for "PayTickets" Page 2 there are no other municipalities within Durham Region that are currently offering this level of service. The direct cost for providing this service is estimated at $5,419 in year one and $2,965.80 for each of the remaining four years of the 5-year contract. This issue was reviewed and approved by the Information Technology Sterring Committee on September 11, 2002. Over the past two years, the City of Pickering's website has evolved into a popular and necessary means of communication. In an effort to raise the bar and introduce e- government solutions via our website, staff recommend that the City enter into a 5-year service contract with Royal Bank of Canada (RBC) and Teranet to provide the opportunity for our clients to pay their parking tickets on-line, using PayTickets. Financial Implications: This proposed e-government solution for paying parking tickets on-line is an improvement in our level of customer service. The anticipated costs for year one of the 5-year contract are $5,419. For the following four years, the annual costs are projected at $2,965.80. Attachment 1 details the 5-year projected cost forecast. These costs are directly related to the service contract offered by RBC and Teranet. There are no additional costs anticipated. Note, the Service Provider (Royal Bank / Teranet) is offering a discount on the Visa/MasterCard merchant rate. Currently the City pays 1.75% for Visa and 2.22 for MasterCard. The rate offered is 1.73%. As it is very difficult to predict payment patterns, the estimated merchant transaction fees identified in the Cost Forecast may not be a new cost. Specific financing for this project has not been included in the 2002 Budget, however, year one costs will be charged to the General Government - Bank Charges Account (2819), and year 2 and beyond will be budgeted in this same account. Background: The Royal Bank of Canada (RBC) and Teranet have joined forces to offer the e-government service of PayTickets. The PayTickets service is a web based portal service that facilitates the online payment of parking tickets and moving violations. The service they offer includes: . A Canada wide branded service to satisfy the demand for electronic service delivery . An ASP (application service provider) service for online collection of parking ticket revenues Report CL 31-02 Date: September 11, 2002 t~5 Subject: Service Contract for "PayTickets" Page 3 . Daily remittance of revenues to the City of Pickering . Integration with Back Office System to facilitate the exchange of ticket and payment information . Joint marketing program / advertising program . Maximum adoption - multiple consumer access points 0 City of Pickering website- City branding retained 0 Canada wide branded retail "PayTicket" portal 0 Links from other sites: RBC, AOL Canada, and others 1.0 How the System Works The City of Pickering's website (as well as on several other sites) would provide a link which would launch the PayTicket service. The PayTicket service provides a simple payment screen for the clients to complete. Clients receive an on-line confirmation receipt. The client pays a $1.50 transaction fee, and payment may be made by VISA or MasterCard. The money is deposited into the City's account daily. At month-end, the City receives a detailed report of the daily funds transfers, which identifies deposit amounts, dates and service charges. The Clerk's office receives a daily file from the service provider identifying the transactions. These payments are then manually entered into our parking infraction tracking system (McDTag). Once a week, the City will notify the service provider of any rejected payments - including a reason for rejection. Examples of rejected payments could be: double payment, payment in the wrong amount, or payment made after plate denial. The service provider in turn will notify the client of the payment rejection and advise them to contact the City directly. 2.0 Statistics 2.1 City of Sudbury The City of Sudbury designed a similar web application using an outside consultant. This system proved ineffective and resulted in the development of an in-house system (programmed and maintained by IT staff) using Cold Fusion programming. It is Sudbury's opinion that this system has proven very successful. In the first six months, approximately 429 transactions had been conducted via the on-line payment option. Based on a yearly estimate of 18,000 parking tickets of which approximately 5% are cancelled, approximately 5% of their payments are made through this option. Based on these very rough estimates approximately 3 payments a day are made on-line. Staff report that the direct advantage of this payment option is the reduction in "headaches" 1 ? 6 Report CL 31-02 Subject: Service Contract for "PayTickets" Date: September 11, 2002 Page 4 with dealing with their irate clients. Their clients have commented positively on the convenience and ease with which they are able to pay their fines. 2.2 Town of Oakville In 2001 the Town of Oakville entered into an agreement with Teranet and the Royal Bank to participate in a pilot implementation of PayTickets. The Town issues about 33,000 tickets a year and accepts approximately 29,000 payments per year. Within the first three months, their usage rate was up to approximately 10% -- they average approximately 20 payments per day. They anticipate their usage to increase to approximately 30%, with their highest usage rate to date being 16%. The Town of Oakville attributes the success of the pilot both to the simple, easy payment process (both for the client and staff) and the inclusive advertising campaign. Oakville promoted the pilot through ads in their local papers, they issued a press release, and conducted a media event including their Mayor and members of Council. Additionally, they placed the PayTickets button on their website homepage. 2.3 Durham Region There are currently no other municipalities within the Region of Durham who are offering this service to their clients. 2.4 City of Pickering The City of Pickering's 2001 parking ticket statistics are as follows: Tickets issued using hand held units Manual tickets issued Less: Total warnings Total tickets issued Total payments (estimate) Total Revenues (estimate) 9392 3048 588 11,852 7,800 $300,000 Based on usage statistics from City of Sudbury and Town of Oakville and based on estimates quoted by the service provider the City of Pickering could expect a 10% usage of the payment option within the first year. This equates to approximately 780 transactions per year or 3 per day. 3.0 Project Justification 3.1 Improve Customer Service Pickering's current payment options for clients include: mail-in cheques or money order, 24-hour cheque or money order drop-off at the Civic Complex, and in-office payments between 8:30 a.m. and 4:30 p.m. by way of cash, money order, cheque, VISA, MasterCard, and Interac. Report CL 31-02 Date: September 11, 2002 Subject: Service Contract for "PayTickets" Page 5 127 The VISA / MasterCard on-line payment opportunity provides a convenient, 24/7, remote method of payment. Statistics indicate that 65% of Ontarians regularly access the Internet. The association with the Royal Bank provides a comfort level of conducting a transaction with a secure, trustworthy party. Our clients view the payment of parking tickets as a "hassle", and often staff are faced with disgruntled and irate customers, both at the counter and on the phone. To offer a more convenient payment option for our clients, should not affect our volume of "paid tickets", but may actually take the "sting" out of their unfortunate situation. 3.2 Progressive Corporate Image The City of Pickering currently does not offer any true e-services through our website. The introduction of e-service reinforces that we are a dynamic and progressive corporation that is responsive to our clients' needs. 3.3 Streamlined payment processing The processing time, per transaction, would be reduced for on-line payments as data input is the only component to the transaction. Over-the-counter payments, however, involve verbal interaction and the completion of a payment receipt in addition to data input. Based on our usage estimates, this time savings really only translates to approximately 15 minutes per day. However, the true benefit to staff would be more flexibility in determining when the payments are entered. As well, the increased opportunity for our disgruntled clients to pay from a remote location can only reduce the negative client interaction imposed on staff. 4.0 Implementation The Service Provider has indicated that the implementation process involves very little from the City's perspective. A project meeting with staff and the Service Provider would be required to confirm implementation dates and data exchange processes. The Service Provider will provide the City with a web address and we would in turn provide this information to our Webmaster to include on our Website. Once our Website is updated, we could go live with the service. Staff contacted the Town of Oakville to seek feedback on the implementation process and they confirmed that it is a very simple process that required very limited staff resources to get up and running. The Town of Oakville installed the link on a Tuesday for testing and went live on the Wednesday. Staff in Clerk's, Finance and IT has confirmed that a target date for implementation of October 14th is desirable. Report CL 31-02 Date: September 11, 2002 1?8 Subject: Service Contract for "PayTickets" Page 6 5.0 Marketing Both the Town of Oakville and the City of Sudbury reported that they had conducted a marketing campaign. The Town of Oakville commented that they believed that the success of the service is directly linked to their comprehensive marketing approach. Over a two-week period, they issued a press release, placed ads in their local newspapers, and held a media event, which included their Mayor and members of Council. Staff will commit to ensuring that suitable marketing ads will be placed in a variety of publications. Attachments: 1. 5- Year Projected Cost Forecast Attachments Copy: Chief Administrative Officer APP.ro. 'tecrJ7EndorYd By: ,h ( - Puce Taylor City Clerk ~~- Gillis A. Paterson Director, Corporate Services & Treasurer Recommended for the consideration of Pickering City Co ncil ;1 Ie Attachment 1 22-Apr-02 Term: 5 years Total annual volume: $300,000,00 estimate Number of tickets per annum: 7,800,00 estimate Estimated rate of collection: 10% (of total annual volume) One time set-up fee: $2,500.00 Transaction fee: $2,00 per ticket Annual Minimum transaction fee: $2,400,00 Annual Maximum transaction fee: $6,000,00 Visa/Mastercard discount rate: 1.73% Transaction event fee: $0,06 per ticket Contract: YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL COST Set-up fee $2,500.00 $0,00 $0,00 $0,00 $0,00 $2,500.00 Transaction fee $2,400,00 $2,400,00 $2,400,00 $2,400.00 $2,400,00 $12,000.00 * Merchant discount fee $519,00 $519.00 $519,00 $519,00 $519,00 $2,595.00 Transaction event fee $0,00 $46.80 $46.80 $46.80 $46,80 $187.20 Total Cost $5,419.001 $2,965,801 $2,965.801 $2,965,801 $2,965,80 $17,282.20 Percentage to $ collected 18.06%1 9,89%1 9.89%1 9,89%1 9,89% 11.52% PAY TICKETS COST FORECAST OPTION 2 t I)!} 22-Apr-02 Term: 5 years Total annual volume: $300,000,00 estimate Number of tickets per annum: 7,800,00 estimate Estimated rate of collection: various increments of 5% each year One time set-up fee: $2,500.00 Transaction fee: $2,00 per ticket Annual Minimum transaction fee: $2,400,00 Annual Maximum transaction fee: $6,000,00 Visa/Mastercard discount rate: 1.73% Transaction event fee: $0,06 per ticket Estimated rate of collection: 10% 15% 20% 25% 30% Contract: YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTALC1JST Set-up fee $2,500,00 $0.00 $0,00 $0,00 $0,00 $2,500.00 Transaction fee $2,400.00 $2,400,00 $3,120.00 $3,900,00 $4,680,00 $16,500.00 * Merchant discount fee $519,00 $778.50 $1,038,00 $1,297,50 $1,557.00 $5,190.00 Transaction event fee $0,00 $70.20 $93,60 $117.00 $140.40 $421.20 Total Cost $5,419.00T $3,248,701 $4,251,601 $5,314,501 $6,377.40 $24,611.20 Percentage to $ collected 18.06%/ 7,22%1 7,09%/ 7,09%1 7,09% 9.31% Cost to replace current tickets: 1, $0,32 each (March, 2001 price - from Secure Business Forms) - We have approximately 7,850 tickets on hand, value $2,512.00, 2, $0.35 each (2000 price - from Groupe Techna) - We have approximately 11,250 tickets on hand, value $3,937.50. Cost to purchase "information stickies": * We must pay merchant fees on all credit card payments whether through Pay Tickets or over the counter. This represents a forecast of costs for "Pay Tickets" based on assumptions stated above, and it does not represent a comprehensive cost/benefit analysis.