How Governments Can Keep Up With Payments Trends

Payments are at the center of many conversations in our world, from cryptocurrency’s rise (and fall, and rise) to the now-common practice of sending each other money through our phones to settle a dinner bill. For governments, payments have always been a consideration, but with more options than ever, how can they find the best way forward from a cash- or check-based system?

This series on payments previously touched on three ways that payment options can increase constituent satisfaction, before showing how a solution tailor-made for government solves common concerns.

Now, payments expert Sloane Wright examines three trends in the world of payments, and how they affect governments. Forward-thinking technology partners have been watching these trends for a while and offer the best way for governments to take the next step in their payment solution.

1. Digital Wallets

Let’s revisit the dinner mentioned above: when settling up with a friend, there are so many options outside of handing over cash in our modern world. There’s Venmo, PayPal, or Apple Cash, to name a few. And within these apps, there are many ways users can load money, such as credit cards or a direct link to a bank account.

This is the struggle governments can feel when dealing with payments – there are many different digital wallets and payment options, as well as more than one payment type within those wallets. There are complicated regulations around payments, and reconciliation at the government’s end can be confusing to navigate.

The best solution will enable government departments to accept payments from digital wallets without the burden of complicated reconciliation processes or additional programming for each app.

“That is exactly what the promise of digital wallets brings, is that ability to open the door to numerous payment options for our government client's constituency without having to change their reconciliation or their business processes,” Wright says.

The best government partners will be the go-between. For example, PayPal authenticates the user’s payment info (whether it’s a credit card, crypto, or even a payment plan), and the technology partner would ensure the payment is routed to government under the same terms as all other payments, like if someone came in person to pay with a credit or debit card.

Want to hear more about payments solutions?

Listen to payments expert Sloane Wright discuss trends in the payments space.

2. Fraud Prevention

Fraud prevention has been widely covered in the private sector space, but it is important for governments to have the backing and expertise that many private companies do when it comes to payments.

It’s rare for government payment solutions to have a depth of knowledge around fraud prevention, as well as the dynamic backing of a data and insights team, but certain partners do. Data visualization tools allow government employees to have a greater understanding of their payments. They can learn what “normal” activity looks like, which gives them confidence in spotting anomalies, representative of a potential bad actor.

The other capability that a data-backed payments solution brings is the potential for automated fraud protection. Machine learning can model “normal” behavior and alert governments of potential issues or prod users to take extra steps to prevent fraud.

3. Disbursements

Many governments still use paper checks for disbursements, even if their incoming payments are managed in a more modern manner. But checks bring many issues, from cost (Wright says up to $7 per check) to governments, to the lengthy process of mailing, waiting for deposit, or reissuing a payment if the check is sent to an old or incorrect address.

The best government-focused payments solutions offer better options for disbursements, from direct deposit (even to a digital wallet, not just bank account) or pre-loaded debit cards.

Partners offering these solutions will be able to give residents and businesses better options and have the regulatory licenses in place to give governments peace of mind. The list of government payouts is long: juror payments, work release, restitution, or unemployment, to name a few. An end-to-end solution will take the government’s list of people and funds, and cover every step thereafter, from user signup to selection of payout.

Setting Trends, Not Following Trends

Trends, by definition, come and go. A quality technology partner will be on top of those trends, offering flexibility to adopt new payment types, while updating as out-of-date options fall away, so governments are always on the cutting edge.