sr-011910-1m~®
acvoe City Council Report
Santa Monica'
I~
City Council Meeting: January, 2010M
Agenda Item: I- 1'
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Merchant Account Processor Services
Recommended Action
Staff recommends. that the City Council authorize the City Manager to negotiate and
execute afive-year contract in the amount of $3,350,000, with TransFirst Health and
Government Services, Inc. to provide merchant account processor services for
payments by credit card by members of the public to the City for fees and services..
Executive Summary
The City requires the services of a merchant account processor in order to accept credit
card payments from the public for nearly all fees and services. Costs over the next five
years are projected to total $3,350,000. The current contract for credit card processing
services expires on December 31, 2009.
Discussion
TransFirst, and its predecessor in interest Payment Resources International, -has
provided credit card processing services under agreement with the City since 2003. At
their June 30, 2009, meeting City Council approved an extension of contract 8886
(CCS) with TransFirst through December 31, 2009 to permit a competitive RFP process
for selection of a successor merchant account processor.
As the City has afforded members of the public to pay for a broader variety of fees and
services on-line, over the counter, by telephone and by mail using credit cards, the
volume of credit card transactions has increased significantly. Since introducing credit
card payment as a form of payment for parking structures in November 2008, for
example, the number of credit card transactions has increased by 750%, from 3,500 to
30,000 per month, with an average monthly volume of $1.3 million. Credit card usage is
projected to increase as the City moves to more on-line transactions for payment of City
fees and taxes. The projected future costs for merchant account processing services
1
are based on actual costs and increased rate of credit card usage during the preceding
24 months. Costs, based on increased usage of credit cards, are projected to increase
at a rate of 10% annually.
A request for proposals for merchant account processor services was issued on June
10, 2009, to which responses were received from TransFirst Health and Government
Solutions, Chase Paymentech, Wells Fargo Merchant Services, Bank of America,
Govolution LLC, Union Bank/Elavon Merchant Services, Citi Merchant Services/First
Data, and Electronic Merchant Services. The responses were evaluated by an
interdepartmental committee composed of representatives of the Finance and
Information Services departments. TransFirst Health and Government Services, Inc:
currently provides merchant account processor services for municipalities throughout
the United States, including cities in Southern California, and is the City's current
contractor. TransFirst was selected on the basis of pricing, complete response to the
RFP requirements, and quality and scope of services.
Financial Impacts & Budget Actions
The five year contact begins on January 1, 2010 with an annual option to renew the
service for the next four years. The first year's contract is estimated to be $550,000
with FY2009-10 cost to be approximately $275,000 available in account 01224.544390.
Annual costs are projected to increase by 10% and will be included in the respective
Proposed Budget for Council's review and approval.
Prepared by: Pamela McGarvey, Revenue Collection Administrator
Approved: Forwarded to Council:
Director of Finance
_~.,.
2