Newark to begin charging fees for paying bills by credit card

Starting Monday, residents who make certain payments to the City of Newark by credit or debit card will incur additional fees.

The fee applies to all payments for tax bills, permits, licenses and parks and recreation programs. The service fee will be equal to 3.95% of the billed amount, or $2.50, whichever is greater. Payments made by phone will incur an additional 50 cents fee.

Residents can avoid the fees by paying their bills with cash, check or eCheck. With an eCheck payment, also known as an ACH transfer, the customer authorizes the city to withdraw the payment directly from the customer’s checking account.

“We understand that any additional cost may be a concern and we assure our customers that we carefully considered this decision. We’re pleased to continue offering lower cost and free payment options including cash, check and eCheck,” Finance Director David Del Grande said. “The City of Newark remains committed to providing services that meet the highest standards of quality and value.”

The city plans to extend the fee to utility bills in the coming months, once a new payment vendor is in place.

City officials have said the service fees are necessary due to the growing cost of accepting payments by credit or debit card.

Whenever a government, restaurant or other business accepts payments by credit card, the credit card company takes a percentage of the payment as a processing fee. For the City of Newark, those processing fees add up to more than $1 million per year.

By implementing the service fee, the city will pass that cost on to customers or encourage those customers to pay via a different method.

The city has discussed implementing a service fee in the past, but those discussions ramped up earlier this year as city council debated implementing a new tax on rental properties to help make up for a budget shortfall. Several landlords argued that instead of the tax, the city should finally implement credit card fees.

City officials had steadfastly asserted that it’s not legal to charge a credit card fee for utility bills. However, in April, City Manager Tom Coleman acknowledged that the city had been misinformed by its credit card processing vendor.

Meanwhile, last week, the state legislature banned the University of Delaware — Newark’s largest utility customer — from paying its city bills by credit card. That alone will save the city nearly $375,000 per year.