Credit Card Service Fee

Credit Card Service Fee: The City implemented a credit card service fee, similar to service fees charged by
other government agencies for credit card payments, in order to recoup some of the charges incurred by the
City of Chicago when processing credit card payments.

Background
Credit card companies charge a fee for processing credit card payments. The fee is a percentage of the value of
each transaction paid for with a credit card. The percentage charged varies by company, but the fee is typically
between 1 to 4 percent. Credit card fees charged by credit card companies for processing utility and other
payments cost the City approximately $16.9 million in 2015 and $14.7 million in 2016.

Revenue Impact
In late 2015, the City began implementing a credit card service fee of 1.83% for certain online credit card
payments, covering the credit card processing costs associated with those payments. The Service Fee
percentage is based on the Citys actual costs, and is adjusted annually. The current Service Fee percentage is
1.97%. Payments for taxes, licenses, tickets (parking, red light and speed), and utility bills (water, sewer,
refuse) are currently subject to the credit card fee. Residents may avoid the credit card service fee by making
online payments with an electronic check (ACH).

To date (09/30/17), the City has recouped $10.2 million in processing fees:

2015 $500,000
2016 $4,700,000
2017 YTD $4,800,000

In 2017, the City expects to collect $6.5 million in credit card service fees.

Legal Authority
Implementing a credit card service fee is within the Citys authority, and changing the fee to broaden its
application requires amendment of the Municipal Code. The service fee rate must be tied to cost of processing
the payment.

Other Government Agencies

Most government agencies assess a credit card fee, and the City was an outlier before 2015.

Credit Card Service Fees Charged by Other Governments:

State of Illinois 2.29% - 2.49%
Cook County 2.13%
Orange County, CA 2.50%
New York, NY 2.49%
State of Indiana 2.49%
State of California 2.30%
Houston, TX 2.50%

The Citys credit card fee is lower than most government agencies due to the fact that the technology to
process the fee was developed in-house, eliminating any additional costs associated with a vendor provided
solution.