Why Now Is the Time to Modernize Government Payments
“Companies succeed or fail according to whether they can keep up with customer preferences, and payments are no exception.” – USBank.
Want to improve the payment experience at your government agency?
Meet citizen expectations—go digital. People expect their local, county and state governments to offer the same payment convenience and flexibility retailers and other service providers offer. Although an increasing percentage of people prefer digital payments, many government agencies don’t offer them, instead relying on outdated methods like mailing paper checks or paying in person. These traditional approaches are inefficient, prone to errors, vulnerable to check fraud and often frustrate constituents.
To improve efficiency, security and service—and reduce costs—government entities must modernize their payment systems. Keep reading to discover three essential capabilities for government payment processing systems and eight benefits of modernizing your payment system.
3 Requirements for Government Payment Processing
Government online payment solutions must be able to:
1. Protect constituents from fraud.
Government organizations that collect payments face two major security-related concerns: losing funds and losing public trust. The Association for Financial Professionals reports that 79% of organizations were victims of payments fraud attacks or attempts in 2024. Paper check remains the most fraud-vulnerable payment method, with 63% of organizations reporting check fraud in 2024. Only about one-fifth (22%) of organizations were able to recover 75% or more of the funds lost due to payments fraud in the same year.
Millions of people in the U.S. are affected by data compromises each year—including data breaches, leakage and exposure—resulting in unauthorized threat actors accessing sensitive personal information. One survey found that 58% of consumers believe that brands that get hit with a data breach are not trustworthy, and 70% would stop shopping with a brand that suffered a security incident.
To help constituents feel comfortable paying taxes, penalties or other fees online, you must prioritize cybersecurity and provide secure payment solutions. Government agencies must comply with strict regulations like Payment Card Industry Data Security Standard (PCI DSS), but legacy payment systems often fall short in protecting sensitive payment data and lack up-to-date security measures, exposing payment data to fraud and cyberattacks.
2. Accept multiple types of payments.
Your constituents now expect 24/7, mobile-friendly payment options for municipal services, including utilities, property taxes, car registration, parking tickets and permit fees.
Consumer payment preferences shift rapidly. According to a USBank survey, digital wallets—the fourth most popular payment method in 2023—moved up to second place (preferred by 60% of respondents) in 2024, behind debit/credit (80%). Cash (57%) rounded out the top three. More than half (54%) of public sector finance leaders say payment acceptance technologies and consumer preferences change so fast it’s hard to prioritize and keep up with trends.
Your payments platform should allow you to accept multiple types of online payments, including:
- Automated Clearing House (ACH) payments or electronic checks (eChecks)
- Credit and debit card payments
- Digital wallet payments such as Apple Pay, Google Pay and PayPal
3. Scale to meet future needs.
The ideal payment processing solution for governments is capable of processing large transactions volumes quickly and smoothly, without delays or disruptions. For example, local governments experience a spike in payments during tax season, and their secure payment solution must be able to accommodate these higher annual demands. Additionally, fast-growing municipalities should be able to meet their new residents’ needs.
Can your legacy payment processing system do all this? If it falls short, it’s time to upgrade to a modern digital solution that delivers what today’s constituents expect.
8 Benefits of Modernizing Your Government Payment System
Reliable digital solutions—such as ACH and credit card processing for government agencies—streamline payment operations, keep constituent data secure and scale according to your future needs. Here are eight ways your department could benefit from modernizing payments:
- Stronger security and compliance: Modern payment solutions include state-of-the-art encryption and fraud prevention tools and comply with the highest security standards, such as PCI DSS, reducing the risk of data breaches.
- Enhanced payer experience, satisfaction and trust: Citizens appreciate the flexibility and convenience of multiple digital payment options, allowing them to choose how and when to pay. People can easily view payment history and receive reminders, supporting financial management. A convenient, secure and frictionless payment experience boosts constituent satisfaction and builds trust in your agency.
- Increased efficiency: Streamlined operations allow your personnel to focus on high-value government initiatives instead of spending time processing payments and doing manual accounting and reconciliations.
- Reduced errors and administrative burden: Automation eliminates the manual reconciliation processes (associated with outdated accounting systems) that increase errors, fraud risk and operational costs.
- Decreased operational costs: Modern payment solutions reduce the need for physical infrastructure, paper billing and manual processing, saving money. Plug-and-play solutions offer a cost-effective, scalable approach that supports sustained cost savings over time.
- Expanded revenue streams: Online, interactive voice response (IVR) and kiosk payment systems allow people to pay via credit card, accommodating those who don’t have immediate access to funds. Improved revenue collection and service-fee models help recoup the cost of updating your payment system.
- Improved cash flow through: With a faster and simpler payment processing solution, you receive payments quicker.
- Increased likelihood of on-time payments: Giving constituents more ways to pay may decrease the likelihood of late payments. Millennials report they are more likely to prioritize paying bills that are easy to pay before taking care of those that are more inconvenient.
Outdated technology and limited budgets often make it challenging for government agencies to modernize their payment systems. Are you ready to find out how modernizing your system can help you, your employees and your constituents.
Contact us to learn how CSG Forte’s government payments platform can help you modernize your government payment solution and simplify payment processing.