Property Tax Payers Deserve Lower Card Payment Fees

Property Tax Collectors have little choice but to charge payment fees to taxpayers who pay their tax bill using a debit or credit card. Why is this so?

It is an issue of fairness. The cost of accepting debit and credit card payments is typically significantly higher than accepting all other forms of payment. If tax collectors paid the costs of accepting card payments, every taxpayer would be subsidizing taxpayers who elect to pay by card.

To illustrate the payment-type cost differences facing tax collectors, below are the approximate costs they incur to accept a $1,000 property tax payment:

  • Online Banking    $0.05
  • ACH                       $0.15
  • Paper Checks       $0.20
  • Debit Cards          $7.50
  • Credit Cards         $22.50

The costs of non-card payments are low and fixed regardless of the dollar amount paid. Card payment costs vary based upon the amount of the payment made. The disparity in costs varies in proportion to the size of the payment: the larger the payment, the higher the card payment costs versus the other much less expensive fixed cost payment options.     

Most tax collectors appropriately “absorb” the low costs of accepting online banking payments, eCheck payments and paper checks. If they absorbed the costs of payments made using cards, those hefty expenses would be unfairly passed back to all taxpayers in the form of higher taxes.

Tax collectors can, and should, charge a lower fee when they accept debit card payments than credit card payments given the significant cost difference in processing a debit card versus a credit card. In the above example, the cost to process a $1,000 credit card payment is three times higher than the cost to process a $1,000 debit card payment.

Tax collectors, having virtually no choice but to assess card payment fees, have a responsibility to provide taxpayers with the lowest possible card payment fees available in the marketplace. CAPE consults closely with tax collectors to help them work with their payment vendors to reduce card payment fees to their lowest possible level, with or without the issuance of an RFP. Tax collectors owe it to their taxpayers to obtain the lowest card payment fees for them. After all, card payers are forced to pay a fee when they pay their tax bill!

Learn how easy and inexpensive it is to deliver lower card convenience fees by contacting David Graham, CAPE’s founder and CEO. Please see CAPE’s website for more details.