5 Advantages of Electronic Payments for Local Governments

Local governments have their hands full. It’s like running a business – well, like running multiple businesses – but with stricter rules, a smaller budget and your customers’ voice typically gets heard.  And just like any business, government agencies have a need to collect payments from their customers, or in this case, residents.

But unlike most businesses, government agencies are still catching up when it comes to payment options, like electronic payments, be it accepting credit cards or using ACH. In some ways, this is surprising – the U.S. Census Bureau reported in 2012 that utility revenue for local governments alone topped $138 billion.

It’s understandable why some governments may hesitate to adopt alternative payments. However, there are multiple processing options and five distinct advantages to instituting electronic payments as part of your government payments plan.

5 Advantages of Electronic Payments

Customer Expectations

Residents’ behaviors are similar to those of retail customers and now, more than ever, they expect to be able to pay in a variety of ways. Paper checks are a declining means of payment. In the Federal Reserve’s 2016 Payments Study, it was reported that physical checks only make up around 17.3 billion transactions, down 2.5 billion in 4 years. Debit cards, by contrast, increased to 69.5 billion transactions, up 13.0 billion since the 2012 report.

With physical checks declining as a preferred payment option, customers expect to be able to pay with credit cards, debit cards and direct payments from their bank accounts. To keep your residents happy, it’s crucial that you provide the payment options that they expect.

Cost-effective

Despite processing fees, electronic payments can be more cost-effective than processing checks or payments in-person. Electronic payments can be processed over the phone via an automated system or through your website, and not require direct interaction with staff to complete the payment. In addition, service (convenience) fees that cover the processing of payments are not uncommon and won’t be a surprise to your residents.

Time for Funding

Payments by check take a good amount of time to clear and for the funds to be available for your organization. This doesn’t even account for the time it takes for checks to arrive at your office, the resources required to handle the checks and prep them for deposit, and recording the payments in your system to credit them appropriately. With electronic payments, there is a much shorter time between submitting the payment and funds being available for use.

Removes Error Prone Processes

There are lots of things that can go wrong when someone mails a payment. Checks can get lost or delayed. The checks themselves can be written in the wrong amount or worse, not include the payment stub which reflects the account number in which the payment should be posted to, causing back and forth between the payee and your office as the error is remedied. People make mistakes, and the more people involved in the process, the higher the probability of issues. With electronic payments, there is less chance for errors to occur.

 Strengthens Your Collections Efforts

Collections can take up a lot of your staff’s time, not to mention delays as you wait for checks to come in. With electronic payments, overdue bills can be handled via an automated pay-by-phone system with a credit card or eCheck, or residents can be directed to a website to complete payments quickly and efficiently without further collection efforts being required.

Alternative payments in government are not only something your residents have come to expect, but can result in a more streamlined system for your office, more accurate payments, and less direct interaction with your staff. All of this combined makes electronic payments advantageous and cost effective for local government offices to implement.

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