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AN ORDINANCE relating to electronic commerce financial transactions; providing for acceptance of certain payments by electronic communications; providing for not charging transaction processing costs for certain nontax payment categories; and adding a new chapter to K.C.C. Title 4.
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PREAMBLE: In 1997, the state legislature gave county treasurers the authority to accept payments made using any type of electronic medium. Acceptance of such payments offers citizens a convenient way of paying for county services and products and may increase the use and purchase of certain revenue-generating services and products. Acceptance of electronic payments also may enhance citizen access to essential services and products which a county provides. The state legislature further allowed counties to absorb the costs associated with electronic transactions for nontax payments if the county’s legislative body found that it was in the best interests of the county to do so. This ordinance establishes King County policy and protocol for the acceptance of electronic payments.
The council recognizes that acceptance of electronic payments opens the way for the sale of county services and products through the Internet, also known as electronic commerce. It is the council’s intent that a full set of electronic commerce policies and guidelines be reviewed and approved by the council before the initiation of an enterprise electronic commerce solution.
BE IT ORDAINED BY THE COUNCIL OF KING COUNTY:
SECTION 1. Purpose. The purpose of this ordinance is to establish King County policy and protocol for departments and agencies that accept payments using any type of electronic media. This chapter reflects state policy as defined in RCW 36.29.190.
SECTION 2. Sections 3 through 7 of this ordinance should constitute a new chapter in K.C.C. Title 4 entitled “Electronic Payments.”
NEW SECTION. SECTION 3. Definitions. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
A. “Automated clearing house” means an association of depository institutions that process financial transactions electronically through the Federal Reserve Bank.
B. “Convenience fee” means a fee that is charged to a payer for the convenience of making a payment through an interactive voice response system or through the Internet.
C. “Credit card” means a card indicating that the holder named on the card has obtained a revolving line of credit from the financial institution issuing the card up to a certain dollar amount valid to a specified date shown on the card. A credit card may be used to pay for products and services from merchants or organizations participating in the corresponding credit card program.
D. “Debit card” means a card indicating that the holder named on the card has an open account in a financial institution shown on the card and that the holder named on the card is authorized to pay for purchases of goods and services from participating merchants and organizations if the account is still valid and has adequate funds to cover the cost of either goods or services, or both, at the time of the transaction.
E. “Electronic payments” means any financial transaction by which funds are transferred to the county through any type of electronic media. The electronic media include, but are not limited to, automated clearing houses, credit cards, debit cards, smart cards and wire transfers.
F. “Interactive voice response system” means a system that allows users to pay for services over the telephone or other audio-signal carrier using a credit card.
G. “Nontax payment” means a payment made for the main purpose of purchasing either goods or services, or both. The transaction may require an excise tax being collected in relation to the purchase of either goods or services, or both.
H. “Smart card” means a card, issued by a participating merchant or organization, that has a specified amount stored electronically on the card to be spent for future transactions. The usable balance remaining on the card decreases with each purchase of goods or usage of the service.
I. “Tax payment” means a payment made for the purpose of fulfilling tax obligations and other special assessments that may be included on the tax statement.
J. “Transaction fee” means a fee charged by a service provider for the execution of an electronic payment.
K. “Wire transfer” means a financial transaction in which the transferor of the funds authorizes an immediate transfer of funds from his or her bank account to another specified bank account.
NEW SECTION. SECTION 4. Electronic payment policies.
A. Requests to accept electronic payments must be initiated by the affected department or agency. A department or agency is not required to accept electronic payments for any service it provides.
B. A department or agency may accept electronic payments for a service it offers, only if the person making the payment bears the transaction fee in such an amount as determined by the finance department in accordance with state law.
C. A department or agency may absorb the costs associated with electronic payment transactions, only if the council has given its approval to do so and absorption of the transaction fees does not conflict with state law, this chapter or established county policy.
D. A department or agency may accept electronic payments for tax payments, including interest, penalties and other amounts associated with taxes, only if the person making the payment bears the transaction fee in such an amount as determined by the finance department in accordance with state law.
E. A department or agency may accept electronic payments for specified nontax payments, including but not limited to code enforcement fines and penalties, special assessments, school and road mitigation payments, and fines, restitution and interest imposed by courts, only if the person making the payment bears the transaction fee in such an amount as determined by the finance department in accordance with state law.
F. If a department or agency collects payments to be shared with another state or government agency, the department or agency may absorb the cost of the transaction fees, only if the benefits to the county are greater than the transaction fees, as determined by the head of the department or agency, and if approved by the council. A department or agency that collects those types of payments may enter into negotiation with other state or governmental agencies regarding the sharing of transaction fees, unless the share of payment collected to be paid to the other agency is specified by state law.
G. The finance department shall develop and administer a comprehensive countywide request for proposal for credit card services. The finance department shall award and administer agreements for the services. A department or agency may not enter into such an agreement without the written consent of the director of the finance department.
H. Electronic payments may be accepted in person, over the phone, by fax, by mail, or through the Internet, as determined appropriate by the head of each department and agency and as is consistent with this chapter and any agreement for electronic payment services.
I. Convenience fees may be added to electronic payments processed through an interactive voice response system or through the Internet. The convenience fee may be calculated to cover any transaction costs borne by the department or agency and may include a fee for expedited transaction processing. A department or agency may not impose a convenience fee unless the director of the finance department has approved the fee.
J. A department accepting electronic payments shall include transaction fees in its annual budget unless the customer pays the transaction fees.
NEW SECTION. SECTION 5. Initiating acceptance of electronic payments.
A. A department or agency may initiate the acceptance of electronic payments without council approval, only if the person making the payment bears the transaction fee in such an amount as determined by the finance department in accordance with state law.
B. A department or agency wishing to absorb the costs associated with electronic payment transactions shall receive council approval to do so. The process for receiving council approval is as follows:
1. The department or agency must submit to the budget office and to the finance department a formal request to initiate acceptance of electronic payments along with a business analysis which, at a minimum, describes any combination of the service or services and product or products for which the electronic payment option is to be offered, assesses the benefits of absorbing the transaction costs associated with these payments, projects the annual fiscal impact of absorbing transaction costs over a three-year horizon, documents legal or contractual obligations that would be affected by acceptance of electronic payments and adequately cites or includes as attachments any documentation supporting its business analysis. The council encourages the executive to develop an electronic payment business analysis template for use by interested agencies; and
2. If the budget office agrees that absorbing the transaction costs serves the best interests of the county, and if the finance department confirms that the proposal meets its electronic payment processing protocol, the executive may transmit an appropriation request to the council. The transmittal package must include the department or agency business analysis on which the original request is based. The council encourages submittal of the electronic payment appropriation requests as part of the annual budget.
NEW SECTION. SECTION 6. Annual reporting. Each year as part of the annual budget transmittal, the executive shall provide the council with a list of those agencies offering electronic payment options. This list must include, for each agency, the budgeted appropriation for absorbing electronic payment transaction costs for the previous budget year, the actual electronic payment transaction costs for the previous year, the budgeted funding for the costs in the present budget year and the proposed funding for the upcoming budget year.
NEW SECTION. SECTION 7. Chapter not waiver or release – pursuit and recovery of costs. This chapter is not a waiver or release of any fee, fine, penalty, assessment or other amount that the county may make or impose for an inadequate or insufficient electronic payment to the county. The county reserves and shall exercise all rights under law to pursue and recover all costs from persons making, presenting or using inadequate or insufficient electronic payment methods.