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Lodi council votes to pass credit-card convenience fees to customers after hearing $1.2M annual cost
Summary
The council approved a policy to pass full credit-card convenience fees to customers after staff reported the city paid about $1.2 million in those fees across departments over the past 12 months; council asked staff to develop implementation steps and customer-notice timing.
The Lodi City Council on April 15 voted to adopt full cost recovery for credit‑card convenience fees after hearing that the city incurred about $1.2 million in convenience fees across departments in the last 12 months.
Revenue Manager Tara Sumner presented the analysis, showing convenience‑fee expenses stem from online utility payments, front-counter transactions and parks/program registrations; online credit-card payments represented 67% of online transactions. “At this point we are spending $1.2 million in convenience fees,” Sumner told the council.
Sumner presented three options: retain the status quo (city absorbs the fees), partial recovery (city absorbs part), or full cost recovery (third-party processors pass fees to customers). Sumner and staff noted that other California cities vary by approach (examples included Stockton, Sacramento and Davis) and that vendors can implement either flat fees or percentage-based fees by vendor.
Public commenters raised equity concerns for low-income residents who rely on credit cards or do not have bank accounts; one commenter urged a capped fee rather than a pure percentage to limit charges on very large payments. Council members asked staff to examine caps or flat-fee alternatives and to prepare customer-notification plans; a motion to approve full cost recovery (option 3) was moved and passed on voice vote in the meeting transcript.
Council members also noted unintended impacts: staff said if the city continues to absorb fees the electric utility could face a roughly 1% rate pressure over time. Council members asked staff to identify implementation timing (the start of a fiscal year was suggested) and to provide recommended fee structures, caps, and outreach plans to assist customers who cannot pay by electronic transfer.
What happens next: Staff will return with implementation details, proposed language to instruct the city’s third‑party payment vendors to pass fees to customers, and recommended limits, caps or alternative payment pathways for vulnerable customers.
