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Convenience could come at a price

January 20, 2011

Improved customer service and convenience could come to Newton utility bill payers, but if it does, it will come at a price.

Newton City Council is considering plans to create an electronic bill payment option for city utility customers. Proposals introduced this week could give citizens the option of making bill payments online, in person at city hall with credit and debit cards, or both.

"Acceptance of electronic payments for the city of Newton could improve customer service to citizens and potentially increase collection revenues ...," according to a memo from Newton Finance Director Serina Hinson, who also said the payments could reduce staff time and expenses associated with delinquent payment collections. "However, the city must consider the transaction fee and the willingness of citizens to accept a collection cost in exchange for the convenience of electronic payment."

The city has three options, when it comes to electronic payments, Hinson said.

First, citizens could pay utility bills online with credit or debit cards. Doing so creates no cost to the city, but online bill payers will be assessed a flat fee estimated from $3.95 to $6.95 to utilize the service. In this method, city customers visit Newton's website to make a payment before being directed to a third-party website, which is responsible for collecting payments and safeguarding all credit card information.

Alternately, the city could implement a program in which citizens could pay utility bills at city hall using credit or debit cards. Newton is responsible for securing customers' credit card information. Under this proposal, the city faces expenses associated with collections, along with the cost of a credit card swipe machine. Hinson estimated annual costs of at least $10,000 to $15,000, depending on usage by about 5 percent of Newton customers. That expense would increase as usage grows.

"We don't have to absorb this fee," she said. "We could apply an administrative fee, but it would have to be across the board to help absorb the cost."

If the city assessed an annual $2 fee to all of Newton's roughly 7,000 utility customers, it could raise about $14,000, she said.

"If we did it monthly, you are looking at 22 cents per (monthly bill) for everybody," she said.

Finally, the city could implement online and face-to-face bill payment, incurring costs to operate debit and credit card swipe operations at city hall, while customers using the online option would be levied the flat fee of $3.95 to $6.95.

Newton Council member Wayne Dellinger said all city residents shouldn't face increased fees to subsidize added convenience for customers who want to pay with a credit or debit card at city hall.

"We shouldn't try to pick up extra money when times are hard. We can do this for those people (for their) convenience, if they want it," he said, adding that it isn't "fair to the rest" of utility customers to pay for the convenience of the minority of bill payers. "Why change a rule to affect 100 percent of people when 5 percent of them would use it?"

While Dellinger supported the idea of levying a flat fee for customers paying bills online, Council member Robert Abernethy Jr. said the cost isn't worth the convenience.

"Its something where we are trying to make it convenient, but it makes it inconvenient to charge $4 to use. It is also inconvenient for people not using it to subsidize those who are," he said, adding that electronic payment might be advantageous for the city if it helps improve collections and avoid employee time spent dealing with bad checks. "There has to be a middle ground where there is no fee for citizens."

Conversely, Council member Mary Bess Lawing said administrative costs spread out to all Newton customers is insignificant.

"If it takes 22 cents more a month, that is worth the convenience to the customers, I think," she said, adding the potential monthly cost per city customers is less than the price of a postage stamp. "If I mail mine in, that is a postage stamp. I could go to one of these options and take care of it. I would not waste gas driving here.

"We are in an electronic age," she continued. "So many people are paying their bills monthly through the bank."

Council members Anne Stedman and Tom Rowe were not present for this week's meeting. Newton Mayor Robert Mullinax tabled the topic until it could be considered by the entire board.

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