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The City of Los Angeles, which historically has demanded cash or checks only for payment for city fees and services, plans to begin accepting credit card and automatic teller machine card payments starting in early April.

"Credit cards have been around, I think, since about 1937. We're trying to get into the 20th Century before it ends," quipped Gerald Capodieci, chief deputy treasurer for the City of Los Angeles.

Actually, the City of L.A. will be among the first major metropolitan cities in the nation to accept credit cards or ATM cards as a vehicle of payment for fees and services, Capodieci said.

Credit cards will be initially be accepted for payment at non-essential city facilities, such as the L.A. Zoo and the Convention Center, Capodieci said. City officials are still trying to decide whether to allow credit cards - or just ATM cards - as a form of payment for essential city fees and services such as business licenses and building permits, he said.

The L.A. City Council voted unanimously last month to begin negotiating a contract with L.A.-based Imperial Bank to process the credit card charges for the city.

Imperial Bank Assistant Vice President Keith Boucher said he expects users of L.A. city services to charge $200 million to $300 million on credit cards annually.

Imperial Bank will get a percentage of all credit card sales, Boucher said. That figure is yet to be negotiated, but he said it should be a fraction of 1 percent.

Capodieci said the city is reviewing a contract with Imperial Bank and expects to begin accepting credit card payments at the L.A. Zoo and at the L.A. Convention Center in April.

Credit card services will be phased into other city departments over the next year or so, Capodieci said. He said the city wants to proceed slowly and cautiously and keep track of the costs of credit card payments.

The City of L.A. and other municipalities have historically avoided accepting credit cards because most credit card companies charge the vendor - in this case, it would be the city - a fee, typically about 1.5 percent, on each sale made to credit card customers, Capodieci said.

Second thoughts

"What has happened in other places is they have implemented them (credit cards) and said, 'Wait a minute, this is costing us a lot of money' and have backed out of it,'" he said.

A city committee, the banking and cash management committee, will decide whether to allow city customers to use credit cards to pay for non-discretionary city fees and services, such as building permits and business licenses, Capodieci said.

The city may accept ATM cards and the Discover credit card for those services, such as city permits and licenses, that city residents and business people can't buy anywhere else.

Discover credit cards have a feature in which the customer and not the vendor of services pays a fee for use of the card, Boucher explained. Visa and other major credit cards do not have this feature, he said.

The city will allow Visa and other major credit cards as a form of payment for city operations such as use of the Zoo, the Convention Center, city-owned parking lots and golf courses, and other non-essential services, Capodieci said.

Competition exists

The city has competition from the private sector for services such as the parking lots and golf courses and many of those competitors accept credit cards, he said.

Capodieci said that as part of its contract, Imperial Bank has agreed to install ATM machines in City Hall and other city buildings.

Imperial Bank plans to become the "premier" municipal credit cards and ATM service company, Boucher said.

Imperial Bank sales people have begun calling city officials in other cities in Los Angeles County, such as Long Beach, Glendale and Pasadena, trying to convince them to allow credit card payments for city fees and services.

"The cities aren't up to speed on what credit cards can do," said John Allen Tharpe, municipal credit card coordinator for Imperial Bank. He noted that by allowing credit cards as a form of payment, cities could cut down on the problem of receiving checks that later bounce.

Another L.A.-based bank company, First Interstate Bancorp, is also pursuing the municipal credit card service business, said Susan Cotton, manager of government services for the downtown L.A.-based company.

Currently, "a small portion" of government agencies offer credit cards as a payment option, but that is changing, Cotton said.

"We're seeing more and more cities, counties and water districts offer credit cards as an option to their residents to enhance timely payment and increase payment flexibility," she said.

Capodieci said L.A. City Council members are in favor of the credit card program because they want to make city services more accessible to residents and businesses.

"The cities are now in competition with each other to be the most efficient, most effective city to do business in," Capodieci noted.

# posted by Medical Information : 3:21 AM