How Government Can Meet Constituents’ E-Commerce Payment Expectations
6 Best Practices for Government Payment Tech
By Matt Zwicky, Product Manager
Cities looking to increase access to public services have many things to consider when accepting payments online. We can learn numerous lessons from e-commerce players that continue to innovate the payments landscape and have made us as consumers more comfortable making purchases online. It is useful to understand how these lessons can be applied to local governments and other players serving the entire population, like utilities.
1. Support Common Payment Methods
We all have our favorite card when shopping online, but cities need to consider more than just card payments. Often, when more payment options are available, there is an increase in the likelihood that the service or obligation will be paid on time, meaning the city is collecting revenue faster. In one city-county that CityBase serves, we saw more than 60% of online payments made by eCheck.
Oftentimes we see our clients implement different payment rules (e.g., whether to process eCheck and card or just card) based on different debt types. For example, parking payments are typically small and not worth the cost of a bank transfer. On the other hand, business tax payments are typically large, and credit card processing limits and fees make eCheck a better choice.
2. Always Uptime
As they say, the city never sleeps. Local governments must be prepared to accept payments 24 hours a day, 7 days a week, 365 days a year from their constituents. This is ubiquitous in e-commerce and cannot be taken for granted at the city level. Consider a situation where a parking ticket must be paid before a car will be released from the pound late at night. The pound needs evidence that that obligation has been paid, so an online payment service cannot be down in the evenings for system upgrades or batch processing. Cities should look for software that leverages modern technology that can be ‘silently’ updated without any downtime to the customer.
3. Connect Underlying Systems
Cities need a way to accept payments for multiple departments, which often have their own source systems (databases) tracking the services a person receives and what they need to pay. Think of applying for a permit or paying a parking ticket. When a person makes a payment online, a good user experience would make it easy for them to find the amount due. That payment software should then report the successful payment back to the source system immediately.
To effectively support all parties involved, and to avoid duplicate payments, the technology powering this experience must operate in real time. For instance, if you’ve made that parking ticket payment in full but did not receive a confirmation, you may want to check the website again. A website that did not integrate into the database in real time would still show that you have a balance you need to pay because the source system hasn’t been updated. As a customer, you’re confused, and you may try to make the payment again. This can cause duplicate payments or inbound calls to the customer support center.
It is essential that back-end systems are connected both to a constituent interface and to a centralized staff interface. This is especially important for staff in finance and customer support to effectively and efficiently solve customer inquiries. I recently sat with a finance analyst who solves cases like duplicate payments, confusing transactions on a credit statement, and other customer questions about billing. I observed her efforts to solve one constituent’s question about their bill. To find the payment in question with only the person’s name and the amount they paid, the finance analyst traversed three different systems to eventually find a payment that matched before she could solve the customer’s issue.
It’s common especially in government for different types of payments to operate on distinct source systems. Rather than uprooting old systems (a sometimes daunting option), technologists can build APIs that allow your interface to pull from different databases and present data and functionality in aggregate. APIs can also ensure that you don’t have downtime if you do someday decide to replace or upgrade those older systems.
4. Robust Reporting
For those working in the centralized finance department of a city, the ability to consolidate reporting drives down costs while increasing constituent satisfaction. There should be a single source of payment information that includes all payment methods (Visa/MasterCard, Amex, eCheck, cash), all channels (online, point of sale, kiosk), and all exceptions that happen along the way, such as chargebacks and checks returned because of non-sufficient funds (NSFs). In many cities, teams of people are required to reconcile daily deposits from several different systems, where each of these sources requires a different way to research exceptions including those mentioned above.
We’ve seen situations where the finance users have one login to reconcile credit cards, another login to reconcile eChecks, and another login to look up the obligation or service that was paid for. This is not uncommon and is often an unintended consequence of working with many vendors and having systems that have evolved over time for different purposes. Stronger system integrations combined with smarter user interfaces can simplify some of these tasks and free up staff time so they can focus on higher-value tasks.
5. Detailed Settlement
We’ve consistently heard from cities that there needs to be a separation of deposits from fees in daily settlements, meaning the incoming funds to the city vs. the fee for processing that payment. People responsible for managing revenue expect a clear understanding of the money that has been deposited, money that is due in fees, and money that has been withdrawn due to chargebacks and other returns.
To make it even more complicated, these centralized settlements need to be reported back to the decentralized systems that serve as a source of truth. For example, consider the case where a person has paid their business tax with eCheck, but it is later returned as NSF. Not only does the Finance Department need to track the payment reversal, the source system that tracks business tax needs to immediately know that obligation should no longer be considered “paid.”
6. Reversals: Handling and Avoiding Them
One of the most burdensome aspects of collecting payments is how to effectively handle reversals. These come in many forms ranging from NSFs to customer-initiated chargebacks, meaning they’ve asked their credit card to refund a payment. This can also stem from a customer requesting a void or refund because they made a payment in error. In all cases, there must be tools and processes in place to let the payer and payee know that a reversal has occurred.
Reports and statements should clearly indicate reversals and the original payment they are reversing. It can be confusing for reconciliation purposes if, for instance, a chargeback takes place several weeks after a payment was made. To ensure clarity to the agencies that manage those payments, cities can ensure that chargebacks and refunds refer to the payment ID of the original transaction.
There are several things cities can do to reduce unexpected reversals. For card payments, the first step is to ensure the descriptor appearing on the customer’s statement is clear, for instance, “City of Cityville Treasury Payment” vs. “CCT Payment.” Even better when it includes a customer service phone number. Cities can improve successful eCheck payments by integrating with banking validation services. These services will prove the account number a customer has provided is accurate, and can also detect when an account is closed or doesn’t have sufficient funds to cover the payment.
Raising the Bar for Government Payments
Cities have a unique opportunity to combine the best practices of online payments with evolving needs across the entire constituent base. Technology continues to become a more common part of everyone’s lives while delivering convenient and lower-cost alternatives that didn’t exist in the past. Learning from the best practices honed by years on e-commerce payments, cities can deliver better service to constituents, recognize revenue with less cost and effort, and free up resources to solve higher value challenges.
Also published on Medium.