Taxes may be higher if you pay by credit card
A small Okanagan municipality is joining a retail trend by charging its citizens a fee to pay by credit card.
Lake Country council last week supported a plan to charge residents two per cent for using their credit cards to pay municipal bills.
That will actually be a reduction as the municipality moves away from a payment system handled by a third party to its own platform.
“We currently have the ability to pay using credit cards thorough our OptionPay system. However, right now if it’s used, it’s more than 3% in fees. What we’re proposing is 2%. This is part of our initiative of implementing the MyLakeCountry citizen facing platform,” Chief Financial Officer Trevor James explained to council.
Some other Okanagan municipalities also use the OptionPay system. And some don’t accept credit cards at all.
“The fees OptionPay charges to the payer start at a minimum of $2.00 and are tiered based on the amount spent,” a report to Lake Country council said. “For example a $200 payment has a fee of $7.01 whereas a $1,000 payment has a fee of $31.50
With OptionPay, online payments are possible, but paying by credit card in person isn’t.
The two per cent surcharge is something consumers are seeing more and more at retail outlets.
Credit card companies have always charged vendors for each transaction that used their cards, but they prohibited the vendors from passing those fees to consumers.
A class-action lawsuit settlement last fall allowed vendors to start charging fees up to 2.4 per cent.
The amount vendors are charged depends on the type of credit card used.
“The cost of fees can range from 0.92% for a Mastercard that doesn’t offer rewards to 2.08% for a Visa premium card in person and 1.45% for a Visa without rewards to 2.54% for Mastercard premium cards when paying online,” the Lake Country report said.
“Why two per cent? You can actually only charge a surcharge that covers the cost to accept credit cards. The idea is you can’t make a profit on it and we also don’t want to incur a loss,” said James. “We estimate around 2% will achieve that cost recovery.”
Other B.C. municipalities charge fees ranging from 1.75 to 2.3 per cent, the report said.
Local governments in the Okanagan have a variety of approaches to credit card payments.
Kelowna doesn’t charge fees for smaller payments, but does if someone wants to pay their property taxes with a credit card.
“The City of Kelowna has recently provided the option for customers to pay their property taxes with a credit card. At an average of 2.3% per transaction amount being charged back to the City, these costs could become significant to the City of Kelowna.
“Finance staff recommended that they not be borne by all citizens but instead be recovered directly from the customers who choose to use this option to pay.
“Customers can still pay with debit, cash or cheque if they do not wish to pay the credit card fee,” acting controller
Matt Friesen wrote in an emailed response to The Daily Courier.
The Central Okanagan regional district doesn’t charge for credit card use.
“The City of West Kelowna does not accept credit cards for utility bills, property taxes or building permits at this time. We accept credit cards through third-party services, which may charge a fee for those transactions,” communications adviser Jessica Hewitt responded.
Peachland does not accept credit card payments.
“The City of Vernon currently accepts credit cards in a few areas, for which we have not passed on the fees associated with credit card transactions to date,” spokesperson
Christy Poirier explained.
“We do not currently have the ability to accept credit cards in person at City Hall, the Community
Services Building or Bylaw cash counters.”
Vernon may look at taking creditcard payments in person, but change will take time.
“Due to the recent changes in legislation, the City is looking at generating a bylaw to allow credit card payments at all in person counters, and we will be reviewing whether we apply the upcharge for the cost of the credit card fees.
“This process requires a fair bit of time and public engagement, so due to other major projects currently underway, this