Local Governments Urge Adoption of Online Payment Solutions

Key Takeaways

Local governments are pushing for online payment methods for utility bills to enhance efficiency and reduce costs.
A survey found that 65% of bill-payers prefer mobile payments, with only 4% opting for checks.
Digital payment adoption, especially among younger users, is growing due to the convenience and flexibility offered by options like ACH and digital wallets.

Increasing Online Payment Adoption

Local governments are actively promoting the use of online payment systems for bills, particularly utilities, as a means to enhance efficiency and reduce the reliance on paper checks. Executives from payment solution firms have noted a significant shift toward digital methods, with Morgan Jines, vice president of payments for Tyler Technologies, highlighting the push for self-sufficient payments. This strategy aims to encourage users to manage their accounts digitally, set up automatic payments, and ultimately lower operational costs for governmental units.

According to a recent survey by InvoiceCloud, 65% of participants expressed a preference for making payments via mobile devices, while nearly 48% indicated they would choose online portals. The survey, conducted by Regina Corso Consulting, consisted of 2,042 adults in the U.S. Only a small fraction, just 4%, preferred traditional check payments. Clark Pierce, InvoiceCloud’s vice president of business development, added that while utilities have begun adopting online payments, many categories, such as tax payments, still lag behind in digital adoption.

At the federal level, significant efforts are being made to phase out paper checks by the end of the month, following an executive order from the Trump administration aimed at reducing opportunities for fraud and theft. Although the use of checks is likely to decline in the future, Jines anticipates they will not completely vanish, particularly for high-value transactions where consumers may favor checks.

One challenge in transitioning to online payments is the additional fees associated with card transactions, which many consumers are wary of. The InvoiceCloud report noted that 38% of respondents cited these extra costs as a deterrent to online payments, while 17% found limited or inconvenient payment options off-putting. Jines pointed out that debit cards remain the most common online payment method, while lower-cost options like ACH are crucial for improving adoption.

Visa and Mastercard have tailored rate programs for utilities, reducing costs for governmental entities. Approximately half of local governments either absorb or pass on transaction fees to users. Jines remarked that many consumers accept these costs in exchange for the convenience of self-service options that online payments provide.

The study indicated a notable rise in the utilization of digital wallets, particularly among younger consumers. The latest InvoiceCloud findings revealed that 10% of bill-payers preferred digital wallets over ACH payments (cited by 7%) for the first time, underscoring shifting preferences. As Jines noted, this inclination is partly demographic, with younger users inclined to utilize platforms like Apple Pay regardless of cost.

Pierce explained that factors such as convenience, transparency, and flexibility are crucial in driving digital adoption. Providing a diverse range of trusted payment options while ensuring a seamless user experience will likely accelerate the move away from paper transactions in governmental billing systems.

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