Exhibit 1 - Agenda Information Sheet - Amendment 3City of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
CFO: Antonio Puente, Jr.
DATE: June 23, 2020
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
authorizing the City Manager to execute a Merchant Services Contract extension between the City of
Denton and Elavon, Inc., through August 16, 2020, to provide merchant services for online Customer
Service credit and debit card payments; and declaring an effective date (File 4578 – extending a contract
with Elavon, Inc., to August 16, 2020).
INFORMATION/BACKGROUND
On December 1, 2014, the Customer Service department implemented a service fee of 2.7% to be applied
to all commercial accounts paying with a credit card online. The 2.7% fee was implemented due to the
increasing costs of card processing fees for the City’s utility bill collections. The credit card processing
charges increased from $344,823 in Fiscal Year 2011-12 to almost $700,000 for Fiscal Year 2014-15. The
increase was mainly driven by commercial rewards cards that account for 58% of processing fees while
only being 8% of the total credit card transactions. City Council directed staff to move forward with the
implementation of the 2.7% fee for commercial accounts only paying by card. Since the implementation of
the service fee, processing costs for all Internet credit card transactions, commercial and residential, have
maintained at approximately $367,000 annually versus the almost $700,000 anticipated costs.
The City of Denton began a relationship with Elavon, Inc. (formerly Nova, Inc.) in 2006. Through Fiscal
Year 2015-16, Elavon, Inc. provided credit card processing and gateway services for all city departments
accepting credit/debit cards as a payment method. In December 2015, the City’s RFP #5955 (merchant
services) was awarded to Wells Fargo Merchant Services (WFMS). Throughout the RFP process and
contract negotiations, WFMS was aware of our current practice charging a percentage-based service fee on
Internet card transactions for commercial utility payments. As Customer Service began implementation
logistics for transitioning to WFMS, they informed the city they did not support a service fee structure for
commercial Internet credit card payments due to updated Visa regulations. The WFMS management team
continues to maintain this position and has since verified their assumption with Visa who ultimately governs
how merchant services are applied and charged with their brand.
The current service fee structure was set within the applicable regulations at the time service was established
with Elavon, Inc. We may continue to use this fee structure with the current merchant services provider,
but must make modifications to comply with current regulations when changing merchant services
providers.
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
On April 16, 2019, Council approved to amend the Elavon contract #5955 extending the terms to May 16,
2020. However, preparing for implementation, the timetable Paymentus presented to onboard WFMS well
exceed their original estimate. Paymentus’ estimate assumed the City would be agreeable to move to the
Paymentus platform which included its own gateway service. This action would have removed the City’s
transaction volume from our current WFMS contract. This was not an option the City could agree to so
another gateway with an existing authorized path to WFMS had to be vetted and brought into the process.
The Customer Service department’s contract with Elavon, Inc. expired on May 16, 2020. Prior to this
deadline, Elavon agreed to continue services as written on the executed contract dated April 19, 2019.
A ninety (90) day contract extension with Elavon, Inc. allows for service and payment of credit card
processing fees while the City continues to implement WFMS successfully. The current amendment also
provides the City, with sole discretion, to further extend as needed, not to extend an additional three months.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 22, 2020, this item will go to the Public Utilities Board (PUB) for recommendation.
On April 16, 2019, City Council approved a Second Amendment to the Merchant Services Contract with
Elavon, Inc., in a term ending May 31, 2020 (Ordinance 19-754).
On May 16, 2016, Purchasing approved a First Amendment to the Merchant Services Contract with Elavon,
Inc., in a term ending May 31, 2019.
On April 5, 2011, City Council approved a Merchant Services Contract with Elavon, Inc., in a term ending
May 31, 2016 (Ordinance 2011-047).
RECOMMENDATION
Award Amendment No. 3 with Elavon, Inc., to provide merchant services for online Customer Service
credit and debit card payments for Customer Service, for a contract extension through August 16, 2020.
PRINCIPAL PLACE OF BUSINESS
Elavon, Inc.
Atlanta, GA
ESTIMATED SCHEDULE OF PROJECT
This is a ninety day (90) extension from May 2020 through August 16, 2020.
FISCAL INFORMATION
This service will be funded from the Customer Service Bank Depository account 870100.7882.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Original Ordinance and Contract
Exhibit 3: Amendment 1
Exhibit 4: Ordinance and Amendment 2
Exhibit 5: Ordinance and Amendment 3
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Christa Foster, 940-349-7412.
Legal point of contact: Mack Reinwand at 940-349-8333.