Redmond ends recurring credit-card autopay for utilities amid fee rules; city offers ACH and promises no shutoffs

Redmond utility staff said the city disabled recurring credit-card autopay because card network rules prevent charging fees on recurring credit-card transactions and the city was unable to absorb the estimated cost; staff said customers can sign up for direct debit from checking or savings accounts and that the utility will not impose shutoffs or late fees tied to the transition.

Council Vice President Forsyth raised the topic during Council Talk Time after multiple residents reported that their autopayments were turned off. Director of Finance and Utilities (Director Cochran) said the change was required because the city cannot legally pass through credit-card fees on recurring credit-card transactions per card-network rules (Visa was specifically referenced). "The implementation of, sort of the credit card fee recruitment did require us to, disable the, service of, automatic payments from credit cards," Cochran said, adding that the city would continue to accept credit-card payments but without a fee recovery mechanism.

Cochran told the council that allowing recurring credit-card payments without passing fees to the utility had previously been implemented and that absorbing those costs would amount to about $600,000 (roughly $200,000 per utility) if the city kept recurring-credit-card autopay in place. She said the city is working to transition customers who previously used recurring credit-card autopay to bank-account direct-debit (ACH) methods and that the city will provide outreach and educational materials. "We can still do a direct debit from customers' checking or savings accounts, and we are working with our customers to transition them," Cochran said.

Staff pledged that no late fees would be applied and that the city would not pursue shutoffs because of missed payments connected to the autopay transition. Cochran also said the utility is exploring ways to simplify enrollment in direct-debit (the current process requires a voided-check form) and will share communications and options with council.

Council members generally supported further discussion and asked staff to report back with options to make the direct-debit sign-up easier (for example, secure electronic forms), additional education and continued customer-service outreach. Councilmembers praised the utility customer-service team for frontline work handling resident inquiries during the transition.