Check or Credit: How Should Orland Park Pay Its Bills?

Could the village reap the bonus rewards associated with credit cards by opting for plastic when paying vendors? Or would fees from the plastic payments deter vendors from doing business with the village, while a credit card company takes its own rewards from millions in transactions?

The Orland Park Finance Committee was presented Monday with the possibility of taking out an American Express corporate card for paying vendors who say they’ll accept credit, including Waste Management for trash collection, as well as salt and office suppliers. Waste Management costs the village about $4 million a year, and the salt and office supplies add up to another $800,000 each year.

Making those payments with the credit card could net about $48,000 a year in reward points, if payments to the vendors stay about the same, and the bonus could be used for more purchases or to donate to a nonprofit, Finance Director Annmarie Mampe said. And using a credit card would save the $1.20 cost it takes to cut each check, she added.

But the committee wasn’t quite sold. Trustee Bernard Murphy suggested capping use of a credit card, because a small portion is taken out of each charge for the credit card company, which cuts into the vendor’s received money. Trustee Ed Schussler agreed saying the bonus points are like a “free lunch.”

“It’s a great deal today to get the points,” Schussler said. “But when it comes time to renew Waste Management’s contract, they might ask for more money because of it.”

Mampe responded that the three vendors openly agree to take credit card for payments and any added cost is “their cost of doing business as a vendor.”

Why should we care?

This is close to an even split.

On the pro-credit side, people who pay credit balances on time, every time, frequently tout the benefits of bonus points, or cash back.  If the vendors don’t have a problem with this form of payment, and at least the three vendors mentioned openly say they accept credit, then some extra funds are available between the bonuses and money not spent cutting checks.

But, the added cost of charges to the vendor could lead to a couple of setbacks. The vendors could submit higher bids for contracts to account for the money they lose from credit payments. And the trustees all agreed that any extra cost in doing business with these vendors could end up being passed along to residents in some form.

Who weighed in?

Trustee Kathy Fenton said credit transactions were a “nightmare” while she owned a business.

“I have to pay extra, and now you’ve put me out of competition with other bidders, because my price is higher,” Fenton said.

Murphy also said the credit payments might deter vendors from offering competitive bids.

Village Manager Paul Grimes said the vendors receive payments more quickly when they don't have to wait for a check to clear.  He also said the village puts out requests-for-proposals to ensure they are getting the best deal possible on contracts, and that would include the vendors that accept credit.

“We don’t know that the increases would be passed on to residents,” Grimes said.

What happens now?

The credit card option was tabled until staff can find out the experience neighboring villages have had with credit payments, and whether vendors do change their prices when credit is introduced.