The State of Government Payments: Insights From 2024 Research

What is one thing government professionals have in common with their payers? Both have frustrations with the payment processing experience. 

In a recent study commissioned by Tyler Technologies, the Center for Digital Government (CDG) found 72% of government officials describe the payment experience for constituents as “poor” or “fair,” while 68% also describe their back-end usability similarly lacking. 

Although many state and local government agencies have gained efficiencies by implementing digital payment platforms, according to this study the user experience often falls short of expectations.

Offering online payments is just the beginning

When evaluating payment technology, security and compliance were ranked as a top priority by 62% of state and local government officials. The fact is, all payment platforms should be secure and compliant at a minimum. 

However, in some cases, governments rely on payment platforms that lack some of the most basic security checkpoints such as requiring a ZIP code with payment, creating further challenges in adhering to PCI DSS compliance and effectively protecting user data while reducing fraudulent actors.

A secure system, but is it easy to use?

After security, survey respondents prioritized ease of use for constituents (46%) and staff (40%) among their top five concerns. But what makes a payments system easy to use? 

The answer was revealed as respondents further ranked their top five priorities: 50% said integration with other systems is a factor when they evaluate payment systems. However, respondents revealed a gap in the industry — only 32% of professionals surveyed described their government’s payment solutions as unified across all agencies.  

“It can be confusing for constituents about where to make each payment type — a utility payment versus a permit or license payment,” said one city official surveyed. 

This confusion ultimately impacts the adoption of online payments, increases collections while reducing cash flow, and creates frustration with residents and their trust in government.

A unified payment system

Today, many agencies currently use department-specific payment technology from multiple vendors, leading to avoidable inefficiencies created by disparate systems of record.

“We still see many cases where governments are leveraging multiple payment processors across various systems,” said Sloane Wright, senior vice president of payments for Tyler Technologies. “In local government, you could have 15 or more systems focused on collecting revenue and three different payment providers, each with different platforms, features, and wallets.”  

By consolidating these disparate systems, agencies can improve both resident and staff experiences, provide a uniform checkout interface, expand payment options, and simplify internal operational and financial reporting processes. This approach reduces training needs, increases security controls, ensures consistent updates to financial records, and improves audit and reconciliation processes, ultimately increasing overall efficiency and financial timeliness and accuracy.

Innovation on the horizon

An integrated system also enables government agencies to remain at the forefront of payment technology. When looking ahead to next-generation system upgrades, the following features and capabilities ranked highest among government professionals surveyed: 

•    68% New security and fraud requirements
•    47% Mobile and contactless payments
•    37% Real-time payments
•    33% New expectations from residents and payers
•    31% Better analytics and reporting

While today’s governments have come a long way in meeting the expectations set forth by commercial payment experiences, they must also meet unique, complex public sector and evolving industry requirements. Historically, these needs have been in direct conflict with one another, leading to an imbalance between meeting resident expectations and maintaining government efficiency and compliance. Some governments focus solely on delivering easy-to-use payment technology to their payers, forcing staff to work around inefficient back-office processes. Others shine a spotlight on improving business-critical workflows at the expense of payer interactions and delivering modernized payment methods.

According to this survey, today’s government leaders demand systems that simultaneously address their critical business and constituent needs — from ease of use to integration and security controls. Unified, enterprise payment platforms can do exactly that and are already doing so for thousands of governments across the country. 

For additional insights into the current state of government payments according to public sector leaders, read the full report.