Govt Payments Part 3: Emerging Trends with Sloane Wright

Tyler Podcast Episode 66, Transcript

Our Tyler Technologies podcast explores a wide range of complex, timely, and important issues facing communities and the public sector. Expect approachable tech talk mixed with insights from subject matter experts and a bit of fun. Host and Content Marketing Director Jeff Harrell – and other guest hosts – highlights the people, places, and technology making a difference. Give us listen today and subscribe.

Episode Summary

Venmo, PayPal, Crypto, and more — payment methods have certainly changed and we talk about those trends and how they impact government in our conversation with payments expert, Sloane Wright. This is part three of our three-part series.

Sloane is an experienced executive working with federal, state, and local governments to deliver award winning technology and payment solutions for almost two decades with Tyler. He has led state division operations in the states of Alabama, Indiana and Florida and has been responsible for using innovation and technology to make all government agencies, including departments of transportation and motor vehicles, more accessible, secure and convenient for businesses and residents.

Transcript

Jeff Harrell: Well, Sloane Wright, welcome back to the Tyler Tech podcast.

Sloane Wright: Thank you. I'm glad to be here.

Jeff Harrell: Well, I'm super excited as well. We've recorded two others, by the way if you've not caught part one and part two of this series, this is part three. We're going to talk today about trends, but part one, we talked about the importance of payments to citizens and part two, we talked about the importance of payments to government and we're going to dive now deeply into trends. And Sloane, I was thinking about this topic, and I remember when I was a kid, mowing lawns, end of the day, you'd knock on the neighbor's door and ask for your payment and they'd hand you a $20 bill.

These days, I feel like that's changed quite a bit. I've got people asking me and requesting money through Venmo and PayPal and other ways. So let's start at a high level. Talk to us a little bit about this space and what's going on trend-wise in the payment space.

Sloane Wright: Absolutely. And Jeff, I think that's a story that probably brings memories to most of us, so I think that's a great example. However, I will say cash is still king, right? So they probably aren't going to turn the $20 bill down. So again, thanks for having me back. Part three, who knew that we would ever have parts one and two, and now we are here at part three of our payments podcast.

As you mentioned, I wanted to spend a little bit of time highlighting some of the emerging payment methods that Tyler has either integrated or is in the process of adding to our portfolio. Again, emerging and trending. So we may not have all the things that we talk about today, but we're certainly fully engaged in working to get those out to our clients as soon as possible.

So first up, how about we highlight some popular digital wallets? Now, right off the bat, some folks may be wondering what exactly is a digital wallet? And I think our audience, especially if they went through part one and part two, they likely have the background. But for clarity, a digital wallet is very similar to a traditional wallet that you would carry with you to hold all of your payment methods whenever you're leaving the house. And where I feel like it differs is the digital wallet, it really lives, for lack of a better term, it lives in the cloud and it's protected by passwords or biometrics or some other method to help keep your payment methods secure.

It also differs because in many cases you can leverage your digital wallet to complete a transaction without ever having to type in a card number or a bank account number into that merchant system that you're interacting with.

Jeff Harrell: And I've noticed that when I've used my digital wallet, I like to think of myself as a trendy person in this space.

Sloane Wright: You're trendy, Jeff.

 

Jeff Harrell: But I always wonder, how is that possible? How do they do that is a big question.

Sloane Wright: Yeah, so it's actually pretty straightforward, but let's try to connect the dots a little bit for our listeners here. Before we get there though, I'm going to use the example of PayPal as a digital wallet and really let that help set the stage. And I'm using that example because I feel like it's a brand that has been in the market for a long time, and it's garnered a lot of support and trust over the years. So hopefully everybody is at least aware of or can connect the dots there with PayPal for this example.

But when one of our residents, for instance, one of your residents I would say has a PayPal account, this means that they have independently gone and set up a digital wallet with PayPal where they will have the opportunity to load payment methods that they would like to leverage for transactions to the platform.

These may be payment methods that are not necessarily underwritten or associated with PayPal, such as a credit card or a bank account from that user's hometown financial institution. Or it could be a PayPal issued line of credit or a number of other options. The point is that when you think of a digital wallet, the owner of that wallet can add in multiple ways to check out, which is what really makes this interesting to me.

For instance, maybe your government agency is responsible for collecting property taxes. Your customers likely want options when paying their property tax bill, especially since these can be, as we all know, higher ticket transactions. But at the end of the day, the mission of the agency is to collect the funds in a timely manner. But if your agency could open the door to expanded options without causing additional reconciliation work or programming work, which I know we all run for the hills on, but while also collecting funds in a timely manner and potentially adding efficiencies, then this would seem like it'd be a win-win for all parties.

And Jeff, that is exactly what the promise of digital wallets brings, is that ability to open the door to numerous payment options for our government clients' constituency without having to change their reconciliation or their business processes. Does that make sense?

 

Jeff Harrell: Okay. And the question that comes to my mind now, Sloane, is what role is PayPal playing in this transaction?

Sloane Wright: Oh, yeah, that's a good question, Jeff. Since PayPal in this case owns the platform for the digital wallet in our example, then they ultimately handle all of the authentication and what I'll call user choice components on how they want to pay for that specific transaction. What Tyler manages is providing the solutions to retrieve and present the bill that's due from the government systems to the resident, and then securely connect the resident to their payment method or digital wallet of choice.

So we would help securely connect the user over to the PayPal wallet in this case. And then once that transaction is authorized from, in this case, the digital wallet, then Tyler provides the resident with the appropriate receipt of the transaction and then provides the government agency backend system with the approval and acknowledgement that the payment was made successfully.

So this ultimately means the customer could have paid with a credit solution like Buy Now, Pay Later, or they could have paid with cryptocurrency or maybe they paid with their credit card or their bank account. In any case, though, the funds will settle to the government under the same terms mitigating the need of our government clients to try and become experts in any of these alternative payment methods, which is really the key here. Right?

Well, Sloane, you said something there I think was interesting. It made my radar go up a little bit, and that's Buy Now, Pay Later. Can you drill down a little bit into what is that? What does that mean?

Sloane Wright: Oh wow. So you picked up on the Buy Now, Pay Later words.

Jeff Harrell: I've never done that before for a car or something. I've never done that, but I'm just curious.

Sloane Wright: Yeah. I'm glad you picked up on it. I think it's become a hot topic and as I think back, it's been around for a while. Even in years back, you've heard of layaway and those types of things, but I think Buy Now, Pay Later ultimately gained a ton of popularity, to me, during the pandemic.

As the name says, this is the way that the resident may be able to tackle some of their larger bills such as property tax without having to deplete their bank account. In many cases, these are provided with reasonable terms like Same as Cash, which might be helpful to residents. If for instance, they do not have the means at this moment to pay their taxes in full, but wanted to avoid the fees associated with a tax certificate and a redemption. Then this could be a viable potential option for them.

I think the most important component here is that to the government, this will be funded to the government account just like any other funds that Tyler would remit to the government. So if you're accustomed to us processing credit and debit cards for you, then this would look exactly like that. And the same goes for crypto or really any transaction that occurs in these digital wallets because Tyler will be responsible for providing the government entity with the tools to reconcile the payments.

One other thing, Jeff, that I think is really cool about digital wallets is that in most cases, they keep a user's card-based payment methods like a credit or a debit card, they keep them up to date. And what I mean by that is that they usually leverage a technology called network tokenization, which enables the digital wallet to automatically update if, for example, your expiration date changes. And I think this is a great feature to help with things like scheduled or recurring payments that you may offer to your residents to help ensure they do not miss a payment.

So a lot of times property taxes are due two times a year. So if a user sets up these property tax payments to be recurring or to be scheduled, but their expiration date or their card changes mid-cycle, these technologies would help to make sure that user's payment is still successful, even though the underlying expiration date changed.

Jeff Harrell: And I'm learning new terminology, network tokenization. I love that one. I'm going to work that in this weekend when I'm talking to friends, I'm going to impress a lot of people. Well, Sloane, I know we're talking about trends and so far you've been very helpful and helped us understand things like digital wallets. Are there any other trends that you're looking for or you're looking at, anything emerging in this space?

Sloane Wright: Yeah. So I don't know if this would be necessarily trendy, but I think it definitely is emerging, which is enhanced fraud prevention tools. As many of our listeners likely know, government is not really considered a high risk payments acceptance environment. That said, we do see our share of pockets of bad actor activity. This is why legacy technologies like address verification and card verification values, the little CVV code. This is why those are so critical. I called these legacy because these are really table stake values that help us combat fraud rather than cause friction to the user.

Friction I think is always the balance, which is why we have teamed up with our Data & Insights division within Tyler. It's not very common that payment providers in the government space also have their own data and insights team. So we thought it made a ton of sense to leverage this incredible team and technology assets to help our clients.

Jeff Harrell: Yeah. I'd love to hear a little bit more about that. So what exactly is that looking like?

Sloane Wright: Yeah, this is really exciting for me, but Tyler has designed an interactive dashboard that is specific to payments to help our clients understand what normal activity actually looks like. As part of identifying normal and being able to see data in new and interesting ways outside of traditional ad hoc type reports. Then we're able to make comparisons and see trends and Jeff, get ahead of things like an increasing rate of chargebacks on a specific service.

But what if we were able to leverage the power of machine learning to help us model normal behavior and anomalies, as well as be able to make predictions about transactions that might need a second look by a member of the government agency's team prior to fulfilling an order. Or perhaps even better layer in some artificial intelligence that asks the user to further prove who they are before we allow the transaction to be complete.

This is exactly what we're working to solve right now with Tyler's Data & Insights solutions. Coupled with the power of the cloud, we have solidified a design partner from one of our largest state government partners to help us understand exactly how they are currently identifying and mitigating fraud in their state by leveraging their workforce team members. We hope to learn from this design partnership and implement the foundational solutions to provide these capabilities to any of our clients and our listeners here who are seeing increased bad actor activity.

And Jeff, that said, I would just make an ask, maybe we pause here for half a second and make an ask that if our listeners are experiencing some bad actor activity and would want to be a design partner, I would encourage them to please reach out to their Tyler salesperson for them to help get you in contact with the payments team so that we can discuss this further.

So Sloane, as we transition towards the end of this podcast, I'd love for you to talk a little bit about payouts, disbursements. We hear that a lot. I'm curious to know what is Tyler's role and how is Tyler working with government to help them in this area?

Sloane Wright: Wow, Jeff, that is a perfect segue into a topic that I actually was hoping that we could conclude on. You are envisioning all these emerging and trending technologies that are so exciting to us right now. But that said, let's spend our last few minutes highlighting Tyler's ability to help the government send money out to residents or businesses.

This may not be applicable to all of our listeners, but I at least thought it was worth a mention because many of our government clients do have to send funds out, and Tyler has some emerging methods to help with this. For instance, we are partnering with a state right now to help enable them to send out biweekly payments to childcare providers throughout the state to help them provide the best care and education to their kiddos.

These childcare providers may choose to receive these funds on a prepaid debit card, which Tyler provides, or they may want the funds to hit their bank account directly, for instance. No matter how they want to receive their funds though, Tyler has technology and possibly most important, regulatory licenses in place to provide the ability to pay out your constituency as a service.

So if your agency is accustomed to cutting paper checks or paper warrants, then this might be an efficiency for your agency to consider. The last stat I saw on paper checks, Jeff, put them somewhere in the range of costing upwards of $7 to issue. And this is a lot of paper check, but it is the reality that takes into account the full life cycle of that piece of paper. It has to get printed, it has to go in the mail, before it goes in the mail it has to get signed. You have to monitor it for stop payments and returns. That life cycle is just kind of never ending.

Also, it may not get cash for a really long time, and so that's problematic. What Tyler can provide though is an end-to-end solution that enables the government to provide Tyler with the approved entities to payout and the funding to make the payouts. Then once that's done, Tyler manages that entire process. Tyler manages the ledger solution to maintain the balances on each of those recipients, as well as provides the user registration and selection platform to help the user claim and direct their funds.

If the listeners are wondering, "Okay, what types of payments can Tyler actually help me with?" Then I would say the list is pretty much endless. Here are maybe just a few examples that I can think of off the top of my head, such as juror payments. So if you have jury duty and you need to pay those jurors out, Tyler can do that. Inmate release or work release programs, Tyler can do that. Restitution payments, unemployment, this is a big area, payments to vendors.

I would even think ... I know we called the pandemic ... It started to turn into a disaster for a lot of places who don't normally deal with natural disasters, and so that brought about a lot of challenges, but you can also think about this payout solution to be able to help get funds out to citizens and businesses in unique times and needs as well.

So I even think, Jeff, I heard a story about one city needing to pay out snowplow contractors or maybe there's rebate programs for government run utilities. So like I said, it's endless, but I'm so glad you asked about it because this is an emerging space for Tyler, and I think there's going to be just tons of opportunity for us to help our clients out.

Jeff Harrell: Yeah, I think the snow plow example was not here in Texas. I'm sure it was up north, very impactful. And there are a few things that you said, Sloane, I think were really stood out to me. One is efficiency, making processes more efficient, and the other thing you said was end-to-end solution and how Tyler can help our clients with an end-to-end solution.

I love it and like we've talked about, didn't know we could do a three-part series on payments, but I think we could keep going if we wanted to. This is such an interesting and deep topic. If someone wanted to learn more, what's the best way for them to do that?

Sloane Wright: Absolutely. I would say two ways. I'm hopeful that all of our government clients and partners have contacts with their Tyler sales reps. That's always a great way to get in touch with us, and that's your personal connection. In addition to that, we also have a payments website at tylertech.com/payments. That's a great way to get in touch with us as well.

Jeff Harrell: Well, this has been great. All three parts. Amazing. Sloane, thank you so much for sharing your expertise and insight with our listeners and knowing how quickly these trends are changing and moving. Hopefully we can have you back to address the next version of what's happening. So thanks so much for joining us.

Sloane Wright: Yeah, absolutely. I look forward to potentially a part four or maybe we spin off that next series, but at a minimum, I hope to see everyone at Connect.

Jeff Harrell: Yes, Tyler Connect. Well, Sloane, thanks for joining us. Have a good weekend.

Sloane Wright: You too. Thanks, Jeff.