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A Miami-Dade County study finds no cost savings to the county or to the public by adding PayPal or other online methods of payment to the county’s structure, and no current demand for the service.
The commission-ordered study of including PayPal or other online payment systems as options to pay for local government fees and services concluded that at this moment it is not recommended.
The Internal Services Department did market research, issuing a Request for Information (RFI) to identify vendors capable of providing additional online payment services. In total, 19 vendors responded, including ACI Worldwide, JP Morgan Chase Bank, CityBase Inc. and U.S. National Bank Association.
PayPal did not respond to the RFI but the county held discussions with the PayPal in which the company cited the conventional user agreement with a standard rate of 3.49% of revenues, plus 49 cents per transaction, a county report details.
The county currently uses Elavon, ACI Worldwide, First Data Merchant Services, and Grant Street Group as merchant processors to settle credit card transactions to collect fees and services.
The Internal Services Department found that PayPal and other online payment systems can be accommodated by the existing merchant payment vendors with modifications in their contracts –except for First Data, which services the Aviation Department.
A cost analysis, comparing what the existing payment providers charge per each $100 transaction found that current fees for processing credit cards range from $1.92 to $3.95, whereas integrating PayPal and other online payment systems through the existing merchants would imply fees ranging from $2.02 to $3.95.
In these cases, several county departments are responsible for paying those fees. Contracting directly with PayPal has a standard fee of $3.98 and would have to be paid by the customer.
“Miami-Dade’s budget is impacted for every transaction processed on a countywide basis, with certain exceptions,” the report by the administration of Mayor Daniella Levine Cava says.
“If PayPal and/or other online payment systems are integrated onto the platform of an existing processor, then the budgetary impacts would be the same as that of the platform. PayPal as a standalone platform would, per their standard practice, charge the customer directly,” the document says.
The county already offers various methods to pay in-person including Apple Pay, Google Pay and Samsung Pay, and other online payments such as electronic check payments, “which is the most cost-effective payment option for our customers at 24 cents per transaction.”
In addition, the county would need to enter in several non-competitive contracts with each online payment applications such as PayPal, Zelle or Venmo, and develop new interfaces for each.
“Considerable Information Technology Department resources would need to be dedicated to modifying the current payment environment. This will impact the ability to support existing and new e-commerce, and other County projects,” the document says.
The Town of Miami Lakes is one of the few municipalities in the county that already has a contract with PayPal as its sole merchant processor. The county documents say they only handle 1,700 to 2,000 transactions as compared to the over 4 million annually processed by Miami-Dade.
The municipality also accepts cryptocurrency payment for all fees collected by the town; PayPal implemented this new payment option in March 2021, the town’s website says.
The study was requested last October, after the county commission adopted a resolution by Raquel Regalado directing the administration to negotiate with PayPal and other online payment systems (excluding cryptocurrencies), examine the feasibility of allowing people to pay for county fees and services on such systems, and following negotiation with the potential vendors, provide a feasibility report to the commission.
https://www.miamitodaynews.com/2022/09/20/no-county-or-consumer-saving-via-paypal-use-study-finds/
