Why is there a fee for using a credit card to pay taxes?

Many merchants accepting credit or debit cards are willing to pay the fees charged by credit card companies in order to provide that service to its customers. As a municipality, we do not have the option of paying those fees since we must collect the full amount of the tax bill. Therefore, when a taxpayer uses a credit card, the fees must be charged over and above the amount of the bill being paid. A convenience fee is charged for processing each debit or credit card transaction as payment to a third party credit card processing service provider, Official Payments, for accepting and processing the payment. The fee also covers the cost of the operation of a toll-free telephone and Web-based, Online system for accepting payment. This convenience fee is charged directly to the taxpayer as a separate charge on their cardholder statement. The fee amounts to 2.75% of the payment amount or a minimum of $3.00 per transaction. No part of the convenience fee is paid to the Town of South Kingstown.