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CC:PA - CONSENT: Approval of an Amendment to the City's Agreement with First Data Merchant Services LLC for Credit Card Payment Processing to Extend the Term until June 1, 2027 and Increase the Total Not-to-Exceed Amount by $600,000 for a Total Amount Not-to-Exceed $1.2 Million.
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CC:PA - CONSENT: Approval of an Amendment to the City's Agreement with First Data Merchant Services LLC for Credit Card Payment Processing to Extend the Term until June 1, 2027 and Increase the Total Not-to-Exceed Amount by $600,000 for a Total Amount Not-to-Exceed $1.2 Million.
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Meeting Date: September 8, 2025
Contact Person/Dept.: Elizabeth Shavelson/Finance Department
Phone Number: (310) 253-6018
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (09/04/2025)
Department Approval: Lisa Soghor, Chief Financial Officer (08/27/2025)
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RECOMMENDATION
Staff recommends the City Council and Parking Authority Board approve an amendment to the City's agreement with First Data Merchant Services LLC (First Data) for credit card payment processing to extend the term through June 1, 2027 and increase the not-to-exceed amount by $600,000 for a total amount not-to-exceed $1.2 million.
BACKGROUND/ DISCUSSION
The City accepts credit card payments for a wide array of fees and taxes through various payment channels. This includes refuse service billings, regulatory permit fees, tax payments, parking fees, and other services and accounts receivable invoices. Credit card payments may be collected online, in-person and via other point-of-sale equipment such as parking meters.
In order to accept credit card payments from customers, the City must engage with a credit card payment processor. Payment processors primarily coordinate the movement of funds between the customer's bank and the City's bank, and provide other services including payment processing equipment and rules for payment dispute resolution.
On June 26, 2023, the City Council approved a three-year agreement with First Data to process the City's electronic credit card payments utilizing the State's Leveraged Procurement Agreement (LPA) with the company. The State's LPA with First Data was a result of a competitive solicitation process conducted by the State of California Department of General Services (DGS). Culver City Municipal Code Section 3.07.055.G. exempts bidding requirements where competitive bid procedures have already been utilized by the City, another public agency, including, but not limited to, federal, state and county governments, including state of California agencies.
The LPA establishes the transaction fees First Data may charge the State and any public agency that leverages the LPA. This arrangement allows the City to take advantage of the State's superior negotiating position and capitalize on the favorable terms the State negotiated with First Data through its competitive bid process.
The City's current agreement is valid through June 1, 2026 and has a not-to-exceed amount of $600,000 for the initial three-year term. The LPA between the State and First Data is valid through June 1, 2027. Staff recommends extending the City's agreement to June 1, 2027 to align with the full term of the State's LPA with First Data to enable the City to continue taking advantage of its favorable fee structure.
Staff estimated that the City would remit approximately $200,000 in credit card fees to First Data per year based on the City's historical credit card transaction data. Since that time, credit card payments have increased more than anticipated. To reflect this increase and to avoid the need for further amendments, staff recommends increasing the not-to-exceed amount from $600,000 to $1.2 million for the extended term.
On April 28, 2025, the City Council adopted Resolution No. 2025-R040 approving and adopting the Comprehensive Fee Schedule for Fiscal Year 2025-2026. As part of the adopted fee schedule, City customers who elect to pay by credit card are now required to pay the actual costs of the credit card transaction fees. This change does not apply to parking fees at parking meters. Credit card transaction fees related to parking meter payments are paid for by the City's Parking Authority (Fund 475). The City has been working with its credit card processors and cashiering software vendors to incorporate the updated fee schedule and capture credit card transaction fees.
Under the terms of the agreement with First Data, First Data collects the transaction fee from the customer and remits it to the City along with all credit card payments on an ongoing basis. First Data then invoices the City for credit card transaction fees monthly.
FISCAL ANALYSIS
The amount charged by First Data is on a per transaction fee basis and is based on the amount and volume of credit card transactions at the various points of service. The anticipated annual amount remitted to First Data is approximately $300,000.
There is sufficient funding in the Adopted Budget for Fiscal Year 2025-2026 in Account Nos. 47516100.520200 (Parking Authority Non-Departmental - Credit Card Fees) and 10116100.520200 (General Fund Non-Departmental - Credit Card Fees) to cover the increased annual amount of $300,000. The credit card transaction fees paid by the City will be off-set by revenue from customers who elect to pay by credit card. Credit card transaction fees related to parking meter payments are paid for by the City's Parking Authority (Fund 475). Funding for future years of the agreement with First Data will be included in future fiscal year budgets.
ATTACHMENTS
None.
MOTIONS
That the City Council and Parking Authority Board:
1. Approval of an amendment to the City's agreement with First Data Merchant Services LLC for credit card payment processing to extend the term to June 1, 2027 and increase the maximum compensation by $600,000 to $1.2 million; and,
2. Authorize the City Attorney to review/prepare the necessary documents; and,
3. Authorize the City Manager to execute such documents on behalf of the City.