Explained: Northport's New Online Water Bill-Pay System

NORTHPORT, AL — It's been less than two months since the City of Northport implemented a new online platform for customers to pay their water bills, in the hopes of streamlining the process.

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Despite the matter receiving full Council approval, some Northport residents claim they were caught off guard by new service fees when paying their water bills via credit or debit card. The vendor — Nextbillpay — is a Birmingham-based payment software provider that works with 800 different utilities across 22 states.

At the time of the Council vote, City Administrator Glenda Webb described the new system as one that would provide a more direct, immediate transaction for customers, as opposed to online checks or having to pay bills in person. The need for such a platform was made that much more apparent by the ongoing COVID-19 pandemic, as public utilities across the country have made a concerted shift toward third party online bill pay systems.

One longtime Northport resident and water customer expressed their frustrations to Patch on background, saying they were surprised to see that nowhere on the city's website or on their billing statement did they see mention of new service fees until they went to pay their water bill.

For this customer, the cost is $2.95 per credit card transaction.

Worried there is a new revenue scheme afoot, the resident said they would be interested to know what the city's cut from the service fees would be. While this may seem like the City Council tried to pull a fast one, the answer is actually a simple and much more common one.

The sector for third party online bill-pay vendors is one that has experienced rapid growth even before the COVID-19 pandemic, with many operating the same way.

The City of Tuscaloosa, for example, uses ATI Payments Inc. as its online bill-pay vendor, with customers charged a flat rate of $1.15 for debit card transactions and $3.50 for credit cards. Customers are also offered the option of automatic bank draft payments, which is available with no service fees attached.

City of Tuscaloosa Director of Water and Sewer Customer Service Alvin Brewer told Patch on Monday that the service fees paid by customers is money that goes strictly to the vendors — a practice that is almost uniform across the industry sector.

"We don't get any costs," he said. "Most utility companies will just go with a fixed rate."

Other larger utilities, such as Alabama Power, also contract with online bill-pay vendors who charge service fees for credit and debit card transactions — BillMatrix Corp., in Southern Company's case.

And like the City of Tuscaloosa, Northport also doesn't get a dime of any of the convenience fees from its vendor, according to City Attorney Ron Davis.

He then explained that Northport customers can pay one of four ways: cash, check, automated payments and online through Nextbillpay.

"If the bill is $75, that is what is withdrawn from your account," Davis said. "There are no extra charges for any of these three. Now, you can pay by credit card. For same $75 bill, city still gets $75. The company we contracted with gets the $3 convince fee. This is the only payment option that costs the customer more."

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