City of Ottawa to charge $0.55 for pre-authorized debit payments for property tax, water bills

The sign outside City Hall in Ottawa (CTV News Ottawa)

Ottawa residents will soon have to pay a $0.55 service fee to pay property taxes and water bills through pre-authorized debit payments.

The City of Ottawa is implementing the new service fee for pre-authorized debit plans in January to recover the cost of administering the service to taxpayers.

The city offers property taxpayers six monthly pre-authorized debit (PAD) plans and one installment plan. The installment PAD plan makes an automatic withdrawal from the property owner’s bank account on the interim and final property tax due dates, while the monthly plans withdraw one-tenth of the annual taxes on a set date each month from January to October.

A pre-authorized plan is also available for water utility accounts that see the payment automatically withdrawn on the bill’s due date.

In April, Council approved a staff recommendation to implement a new $0.55 service fee for pre-authorized debit payments for property tax bills and water bills. For residents who pay their property taxes in 10 monthly installments, the new fee will cost $5.50 in additional fees each year.

“No other municipalities in Ontario charge a user fee for administering PAD plans,” staff said.

“Preauthorized debit payment fees are applied in the private sector, for example where an installment plan is provided to an annual charge such as an insurance premium.”

According to the report, the average cost of processing electronic payments per transaction was $0.19, while the average cost of processing a PAD was $0.74 per transaction.

“With the advancements in payment technology, the PAD plans no longer offer any significant financial benefit to the city and are costly to maintain,” staff said.

“Despite being one of eight payment options provided to taxpayers, the plan administration uses almost 40 per cent of the full-time equivalents responsible for applying and recording all property tax and water utility payments.”

The administration of the pre-authorized debit plan requires full-time support from seven staff members.

Staff recommended the $0.55 transaction fee for all pre-authorized debit plans.

“The fee would raise approximately $820,000 annually based on 2024 data,” staff said.

“The fee would not fully cover the cost of the administration of the PAD plan; however, this would recover the difference between the cost of administering PAD versus all other electronic payment types.”

In 2024, the City of Ottawa had 108,894 tax accounts and 86,734 water utility accounts registered on the pre-authorized debit plans.

The city says pre-authorized debit payment plan subscribers will receive a bilingual letter outlining the new fee, its reason and when it will come into effect.

The City of Ottawa said while there is no requirement in the Municipal Act to offer a pre-authorized debit plan to taxpayers, “the city provides it for the convenience of residents.”

Service fees for payment card processing

The City of Ottawa is eliminating some charges for online transactions.

The report for Council in April recommended retiring the $1.50 fee charged for each parking ticket paid, as the online parking ticket payment system transitioned to the Administrative Penalty System. All payments will be made through the city’s preferred payment provider and staff say the fee will no longer be required.

The city also retired the $1.50 fee charged for each Interac online transaction.

“As of November 1, 2024, due to the limited number of online payments processed with Interac cards, the City’s Card processor no longer supports the use of such cards as a payment method for online payments,” staff said.