Contra Costa Water District approves $1.58m payment contract amid debate over rising transaction fees

Contra Costa Water District approves $1.58m payment contract amid debate over rising transaction feesThe California utility will continue to absorb online payment costs for now, but a 40% digital adoption rate and soaring transaction volumes are prompting a review of cost-sharing models to protect ratepayers.

The Board approved a two-year, $1.575 million contract with Paymentus for online billing and credit card processing services.

CCWD currently absorbs approximately $700,000 in annual transaction fees, covering over 210,000 online payments.

Nearly 40% of the district's bills are now paid online, a massive increase from the 30,000 digital transactions recorded in FY20.

The utility's Finance Committee will review the cost-absorption policy in November 2026, noting that the fees are approaching 1% of total water rates.

The Contra Costa Water District (CCWD) Board of Directors has authorized a two-year, $1.575 million agreement with Paymentus for online billing and credit card processing services, a move that sparked a broader debate over the long-term financial sustainability of absorbing customer transaction fees. Since 2019, CCWD has absorbed online credit card processing fees as a customer enhancement. At the time, the policy was estimated to cost the district $120,000 annually. According to Assistant General Manager Jeff Quimby, those costs have since surged. The district is projecting over 210,000 online transactions this year, costing approximately $700,000. Nearly 40% of the district's utility bills are now paid through the online portal. The new Paymentus contract will lower the standard per-transaction fee from $2.50 to $2.00, which is expected to reduce CCWD's estimated transaction costs by 9%. However, high-reward "non-qualified" credit cards will continue to incur a 2.85% fee that the district must pay. The approved contract allocates $775,000 for fiscal year 2027 and $800,000 for fiscal year 2028 to cover these processing costs. Vice President Martinez noted that the escalating fees are approaching 1% of the district's overall water rates, raising questions about whether utilizing ratepayer revenue to cover affinity credit card fees could conflict with Proposition 218. Legal counsel clarified that absorbing the fees is legally considered a standard cost of doing business and does not violate the proposition. Quimby presented market analysis showing that out of 15 monitored regional water agencies, only five currently charge customers a transaction fee. The broader industry trend leans toward utilities absorbing the costs to avoid customer backlash, with Quimby noting that one regional agency recently attempted to pass fees onto customers but reverted the policy after facing significant complaints. While the board opted to maintain the status quo for now, the Paymentus contract includes built-in flexibility to switch to a split-cost or customer-paid model in the future. The CCWD Finance Committee is scheduled to formally review the transaction fee policy and explore potential customer education initiatives in November 2026.