Credit card payments allow a government to receive funds in one day and are
becoming more commonly used for fees and taxes. To accept credit card payments,
a local government contracts with a credit card service provider and
pays a discount fee on each transaction. A drawback to accepting credit cards
is that a taxpayer can challenge a charge and the government could lose its
funds through a charge-back by the credit card company. In addition, many
governments cannot reduce the amount of taxes paid to cover the discount
fee charged by the credit card companies, and credit card companies do not
allow vendors to pass on the discount fee to the credit card holder. However,
governments can impose a convenience fee for paying by credit card. This is
a particularly common practice for Internet transactions. In addition to
Internet transactions, credit card payments are commonly used for over-thecounter
collections, telephone transactions, and mail-in payments.