Credit card companies used to fight the idea of allowing government agencies to charge convenience fees for residents who paid with their cards, arguing that the fees would discourage credit card use. But, as people grew accustomed to paying the fees for non-government services or online purchases, eventually, the credit card companies changed their tune.

Although there were few laws that prohibited convenience fees, many states passed laws to allow flat convenience fees for most types of government services. Not only do electronic payments offer additional and convenient methods of payment, the flat convenience fees for the services can strengthen an agency’s budget by providing an additional revenue source. By using flat convenience fees, governments can cover their costs for the services.

A local government agency can implement an electronic payment system by contracting with a third party that processes the payments and remits them to the appropriate agencies. Companies can offer equipment, training, and support at no cost to the agency, and, the service often can be used with existing software and hardware, or provided separately.

Three methods of electronic payments commonly use flat convenience fees, which provide distinct benefits for residents and local governments.

• Online — According to Nielson/Net Ratings, nearly 75 percent of U.S. households, or 204.3 million people, have Internet access. Payment gateways can either be placed directly on a government Web site, or, users can be directed to a third-party site. Residents can pay their taxes, renew their license plates, register for dog tags, or pay their parking ticket online.
• Terminals — Residents can avoid long lines at counters and receive confirmed payment by using a credit card terminal in government offices. A card can be verified and accepted in less than six seconds, and payments can be processed on the same day.
• Phone — While the majority of U.S. households have Internet access, more than 93 percent of homes have a telephone, which also can be used for electronic payments. Automated systems or call center staff can collect the credit card or check information for processing.

Agencies that use all three methods offer the widest variety of options for residents. Flat convenience fees make services more than just convenient, they make common sense.

http://americancityandcounty.com/mag/government_convenience_charges/