The Department of Safety and Inspections (DSI) announced changes to payment options effective April 3, 2021.

DSI Deputy Director Dan Niziolek was joined by Christian Rekow from Bridgewater Bank in giving a presentation about these changes in March. Christian Rekow, assistant vice president of commercial lending at Bridgewater Bank, works with local businesses ranging from $50,000 to $10 million in revenues across many industries.

Payment Changes

Effective April 3, 2021, customers paying Department of Safety and Inspections (DSI) fees will be:

  • Responsible for a credit card service fee when using a credit or debit card.
  • Able to use electronic checks (no service fee) when paying online.

This includes fees for business licenses, construction permits, Certificates of Occupancy, animal sheltering, and variance and Site Plan Review applications, as well as any fines owed.

  • Credit card service fees apply to all DSI fees and fines paid with a credit or debit card.
  • Current system of the City paying service fees results in taxpayers and non-credit card paying customers paying for the service fees of others paying with credit cards.

Credit Card service fees being paid by the City have continued to rise. Currently, DSI pays approximately $300,000 in service fees each year.

New Credit Card Process

  • The new process applies to customers paying in person, via fax or mail, or online portal.
  • When using a credit or debit card, customers will see two charges on their statement.
  • The City will not be able to address service fee issues. Customers will need to work directly with the vendor.

To understand the impacts associated with customers paying service fees, DSI conducted a customer survey. The Department received more than 600 responses and relied on these survey results to guide its efforts to support businesses through this transition.

Payment Changes – Customer Survey

  • Representative mix of respondents
    • 30% represented businesses with less than five people
  • Reasons that would discourage use of electronic checks:
    • 31% Unfamiliar with electronic checks
    • 23% Use credit card to cash flow business
    • 31% Use credit card to receive perks
  • Potential impact to being charged service fee
    • 50% - None to very little
    • 27% - Some
    • 19% - Significant

New Electronic Check Payment Option

  • The evolution of electronic checks is providing a less expensive online payment option.
  • This option is dramatically less costly ($0.25 per transaction – paid by the City).
  • Other departments within cities, counties, and states have customers paying service fees.

These changes will be take effect on April 3, 2021. Christian Rekow discussed financial tools as well as ideas on how to seek the best options to meet your financial needs.

Alternative Financial Tools

Based on the survey results, the City encourages customers to assess the financial tools available.

  • Different types of financial institutions
  • Credit cards, loans, and lines of credit are the main non-cash way to pay bills.
  • Each option has variability within them and by institution. (e.g., interest rates, payments)

Financial institutions include commercial banks, credit unions, certified development companies which can offer financing options such as credit cards, term loans and lines of credit.

Alternative Tools – Line of Credit

  • How they work
  • Options
    • Straight Line of Credit
    • Overdraft Line of Credit
  • How they compare to credit cards
    • Interest rates and fees
    • Payments

Each option features different structures, specific to the need of the business

    • Credit Cards: 30-day billing cycle (i.e., monthly cash flow needs)
      • 15% to 25% interest rates
    • Line of Credit: 12 months (for short term working capital – inventory, accounts receivable)
      • 4% to 7% paid monthly based on only interest
    • Term: 36 to 84 months (3 years to 7 years) – equipment and business expansion
      • Fixed payments based on the terms

Evaluating Financial Options

  • Identify your financial needs.
    • Conduct a cash flow analysis of your business
    • Identify amounts, timing, and purpose of non-cash financial needs
    • Write up a financial assessment
  • Talk with at least 3 financial institutions to evaluate the best financial tool(s) available to address your needs.

It is important to establish a relationship with your financial institution, addressing what your business will need in the short term and long-term needs

  • Break out short term needs (within 30 days), longer term needs (30-90 days) and equipment/expansion needs (12 months to 84 months)
  • Credit Cards: short term needs for business – utility bills, meals, supplies
  • Line of Credit: purchases of materials, payroll needs and other professional needs
  • Term: new equipment and real estate, purchase of business, and other longer term needs
  • Typical FIs look for clean historical records for the business: profit and loss statement, and balance sheets along with projecting / budgeting future performance of the business
  • In the best interest of your business, look to work with several FIs to find the best (lowest) cost of borrowing

Check out the City of Saint Paul’s website, where you will find helpful information under the Planning and Economic Development Department’s “Business Technical Assistance” section

Payment Changes – Resources

  • The City of Saint Paul’s website lists numerous organizations that work with businesses and residents to provide information on available tools and resources. There are a wide range of available organizations.

Last Edited: March 24, 2021