Denton PUB backs 1.55% service fee on card utility payments, excluding eChecks
March 09, 2026 | Denton City, Denton County, Texas
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The Denton Public Utilities Board on March 9 recommended that the city recover utility card-processing costs by implementing a service fee of approximately 1.55% on card payments, excluding electronic checks (eChecks/ACH). The motion passed by voice vote with no opposition.
Matt Hamilton, the city’s chief financial officer, told the board that card-processing costs have risen largely because more customers are choosing card payments. He said processing for utility online payments accounts for about $1,570,000 annually in expense and that a recent year‑over‑year increase in fees represented roughly a 20% jump in costs driven by transaction volume. Hamilton explained that card-processing costs have three components—interchange (set by card brands), network assessment, and the payment processor fee—and that the city has little ability to negotiate brand-set interchange rates. "The city has very little, you know, input and influence in terms of card processing costs," Hamilton said.
Hamilton described three recovery options: keep recovery in utility base rates; implement a flat convenience fee for nonrecurring online payments (including eChecks); or implement a service fee (flat or percentage) that can be applied to card payments but would exclude eChecks and could include recurring payments. Staff estimated a service fee of roughly 1.55% would recover most of the $1.5 million annual cost and would be cheaper for the average residential online payment than the flat-fee option.
Board members debated fairness between flat and percentage approaches and emphasized customer education to steer people to eCheck/ACH, which carries much lower fees. Staff said implementing a service fee would require vendor configuration and an estimated six-month timeline, with a target implementation date of Oct. 1 pending further steps.
The board’s recommendation directs staff to proceed with the service-fee approach and to prepare materials for city council and for customer outreach.
Matt Hamilton, the city’s chief financial officer, told the board that card-processing costs have risen largely because more customers are choosing card payments. He said processing for utility online payments accounts for about $1,570,000 annually in expense and that a recent year‑over‑year increase in fees represented roughly a 20% jump in costs driven by transaction volume. Hamilton explained that card-processing costs have three components—interchange (set by card brands), network assessment, and the payment processor fee—and that the city has little ability to negotiate brand-set interchange rates. "The city has very little, you know, input and influence in terms of card processing costs," Hamilton said.
Hamilton described three recovery options: keep recovery in utility base rates; implement a flat convenience fee for nonrecurring online payments (including eChecks); or implement a service fee (flat or percentage) that can be applied to card payments but would exclude eChecks and could include recurring payments. Staff estimated a service fee of roughly 1.55% would recover most of the $1.5 million annual cost and would be cheaper for the average residential online payment than the flat-fee option.
Board members debated fairness between flat and percentage approaches and emphasized customer education to steer people to eCheck/ACH, which carries much lower fees. Staff said implementing a service fee would require vendor configuration and an estimated six-month timeline, with a target implementation date of Oct. 1 pending further steps.
The board’s recommendation directs staff to proceed with the service-fee approach and to prepare materials for city council and for customer outreach.
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