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Newton utility customers to get new payment options

February 8, 2011

Newton residents with a debit or credit card may soon be able to pay their utility bills online and in person. That convenience, however, will come at a price for customers.

"We are hearing it more and more — customers want to pay with electronic transfer," said Newton Finance Director Serina Hinson.

Newton City Council gave Hinson the green light to seek proposals from vendors that can provide online bill payment through a link to the city's website.

"There is no fee to the city and there is no equipment cost," Hinson said, adding that online bill-payers would be subject to a fee from the online collections company. "That fee would be passed on to customers.

Citizens would pay approximately $3.95 to $6.95 per transaction. As they are accessing the website, before they click the button, it will warn them that there will be a surcharge."

Likewise, the city is exploring methods to accept credit cards for utility payments at Newton City Hall. Again, in this case, the city plans to pass along fees incurred from citizens who want to use credit cards for bill payments. Adding a transaction fee for face-to-face card payments will also limit the city in terms of the types of credit cards it can accept, Hinson said.

"We will only be able to accept American Express and MasterCard," she said, adding, those credit companies allow the city to add a surcharge.

Visa does not allow utility bill payments, Hinson said.

"Folks would be able to pay with a credit card and deal with paying their bill over a period of time to the credit card company," said Council member Robert Abernethy Jr. "Then it would be up to the credit card company to get money out of them."

In establishing electronic payment at city hall, Newton would invest about $700 in card swipe terminals, Hinson said, but City Council balked at absorbing other fees associated the with the face-to-face transactions. Hinson estimated that about 5 percent of Newton utility customers would use electronic payment options at city hall in the first year, and that could create about $10,000 in new expense for the city.

Newton officials surveyed other N.C. cities that accept electronic payment in person, and found that on-site card swipe payments created varying degrees of cost, based on usage and service provider.

About 9 percent of Lenoir's 10,000 customer base, or 900 customers, use electronic payment, and the city absorbs $8,000-$9,000 in cost annually.

In Laurinburg, about 35 percent of 10,900 customers, or about 3,800 users, take advantage of electronic transfer. Laurinburg absorbs about $36,000 in costs each year.

In January, Newton City Council debated whether to add a flat increase to all customers' bills to pay the cost associated with face-to-face electronic payment.

"Why should this board or any citizen end up paying a higher rate because somebody else paid by credit card?" said Newton Mayor Robert Mullinax. "If you are talking about $10,000-$15,000 in expenses, that is something that is going to have to be passed on."

Currently the city allows citizens to set-up automatic bank drafts for bill payments, and Hinson said that is a popular payment option for many customers. At its February meeting, Newton City Council directed Hinson to pursue vendors for online and in-person electronic utility bill payments, provided transaction fees will be passed on to customers and not create any additional expense to the city.

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