PREPARED BY: ARTURO CASTILLO DATE OF MEETING: 04/20/2026
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO APPROVING THE TRANSFER OF CREDIT CARD CONVENIENCE FEES TO CONSUMERS FOR ALL ONLINE AND REMOTE CREDIT CARD TRANSACTIONS
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
COMPLIANCE STATEMENTS
Continue Best Management Practices, Fiscal Excellence, and Fiscal Transparency is a major policy goal contained in the FY 2024-26 City Council Priority Workplan.
BACKGROUND
The City of San Pablo has historically absorbed all credit card processing and merchant service fees associated with payments for City services. These fees are charged by the City’s two primary credit card processing providers Global Payments and First Data and are recorded under General Ledger Account 100-1430-43500.
Credit card convenience fees are standard charges assessed by payment processors when customers use credit cards to pay for government services. These fees typically range from 2.50% to 3.95% of the transaction amount, depending on the provider and payment method. These fees apply to all credit card transactions regardless of whether the payment is made on-site or remotely, as the merchant service provider charges the City for each transaction processed.
In January 2026, the Finance Department researched credit card convenience fee practices among Contra Costa County cities to recommend whether the City should continue absorbing these fees or transfer them to consumers. Staff conducted a comprehensive review of fee practices at comparable local jurisdictions and analyzed the City’s historical credit card processing costs.
On April 1, 2026, the Budget, Fiscal and Legislative Standing Committee (BFLSC) reviewed the staff presentation and recommended that City Council approve the transfer of credit card convenience fees to consumers for online and remote transactions.
Historical Cost Analysis
The City’s credit card merchant service fees have increased significantly over the past three fiscal years:
|
Fiscal Year |
Global Payments |
First Data / Fiserv |
Total Gross Fees |
|
FY 2022-23 |
$16,484 |
$42,136 |
$58,620 |
|
FY 2023-24 |
$19,963 |
$51,495 |
$71,458 |
|
FY 2024-25 |
$26,551 |
$55,864 |
$82,415 |
After accounting for US Bank rebates (averaging approximately $10,500 annually), the net cost to the City has grown from approximately $47,980 in FY 2022-23 to $72,146 in FY 2024-25 representing a 40% increase over three years. Current FY 2025-26 projections indicate fees are expected to exceed $100,000 based on trending actuals.
The FY 2025-26 budget allocated $83,000 for this line item, which is already insufficient based on actual spending trends observed in ClearGov data from FY 2023 through FY 2025.
Comparable City Practices
Staff surveyed credit card convenience fee practices among Contra Costa County cities. The overwhelming majority pass these fees to the consumer:
|
City |
Fee Rate |
Passed to Consumer? |
|
Richmond |
2.95% |
Yes |
|
El Cerrito |
3.50% |
Yes |
|
Berkeley |
2.85% |
Yes |
|
Pinole |
2.95% |
Yes (except police fines) |
|
Walnut Creek |
3.00% |
Yes |
|
Concord |
2.50% |
Yes |
|
Contra Costa County |
2.75% |
Yes |
|
Hercules |
2.75% - 3.00% |
Absorbed (Council resolution) |
|
Albany |
3.95% |
Yes |
Payment Options
City consumers will have multiple payment options to support city business:
Option 1 - In-Person by Check or ACH: No fee. Customers pay at City Hall by check or ACH transfer.
Option 2 - Credit Card (On-Site or Online): Convenience fee applies. Whether paying by credit card at City Hall or remotely via e-trackit and other online portals, a convenience fee will be charged by the service provider and paid by the customer. Merchant service providers charge processing fees on all credit card transactions regardless of payment location.
FISCAL IMPACT
Approval of this resolution is expected to generate annual savings to the General Fund of approximately $72,000 to $100,000 or more, based on current and projected credit card transaction volumes. The FY 2024-25 gross merchant service fees totaled $82,415. With fee growth trending upward, annual fees are projected to exceed $100,000 in FY 2025-26 and ongoing.
ATTACHMENTS:
Att A - Resolution