Today’s reality is that payment processing is no longer straightforward; it’s an intricate, complex system. However, in the COVID-19 era—and beyond—digital payments are essential to providing people and businesses with an optimal, expedited experience.
During a recent Government Technology webinar, “Doing Digital Payments Right – Expert Advice for Cities and Counties,” Sloane Wright, Vice President of Payments for government technology firm NIC Inc., laid out his basic “dos” and “don’ts” for government payment processing.
Do embrace alternative payment methods. Government must be able to meet its citizens where they’re comfortable. It is estimated that up to 25% of U.S. households are considered either unbanked or under-banked, meaning credit and debit cards are largely unavailable. There are also separate groups who are “cash preferred” or who utilize digital wallets. Plus, given the current situation, in-person payments might not always be an option, making it even more important to offer online payment services in the same form as those accepted in-person. All of these reasons are why it’s crucial for government to offer alternative payment methods like PayPal, Automated Clearing House (ACH) payments, cash acceptance solutions, digital wallets like Apple Pay, and even Peer to Peer (P2P) payment solutions. Government must continue to provide the conveniences and services that a population embraces to continue fostering frictionless interaction.
Do understand all fees. Payment providers use many different models including flat fee, percentage-based fees and a combination of the two. However, some models have hidden fees, such as the charges associated with processing a chargeback or a full refund. The key is to ultimately understand how each model will best align with a government’s goals, a customer’s needs and the volume of customers utilizing the system. It is imperative to work with a provider that will be transparent about any and all payment costs.
Do emphasize security. At times, the balance between payment security and ease of use becomes a battle. However, security should always be the top priority. In this sense, government can help itself by contracting with a partner that has a security-focused team and brings its own experts to ensure complete confidence and compliance. Keeping up with fraudsters and bad actors is a full-time endeavor, especially in the government payment processing scene. Focus on a partner that is not only level one PCI-compliant, but also is within the government ecosystem and has other areas of security focus, such as SOC 2 reporting and NIST compliance. Additionally, tokenization has become essential, specifically in the way of protecting cardholder data. Tokenization not only plays a critical role in security for cardholder data but also for enhancing the overall payment experience with stored payment capabilities and simplifying the refund processes.
Do find a platform that fits each need. When it comes to integration, plug and play doesn’t always work in the payments space, unless the partner is a single, online e-commerce retailer. Keep an eye out for a provider that may have a suite of PCI compliant tools for government to leverage. Additionally, offloading the actual process of capturing payment details from a user to a partner is critical not only in terms of PCI compliance, but also in terms of the transaction’s metadata being provided back to the correct government entity and written to the financial records. A platform that offers API integration significantly cuts down on development effort and speeds up adoption of new payment capabilities with the flexibility to innovate and adapt to changing needs. Make sure the financial gateway that is managing the payment process can produce reports that will help to streamline the process of data entry into financial systems of record. Payments are complex, so ensure any potential partner’s experience within the industry is analyzed. A lack of experience around this topic can lead to integration delays, poor internal reporting and a solution that doesn’t fit a government’s specific needs.
Don’t work with a platform not aligned with government. It’s imperative to find a partner that has experience in the government space. Most payment processors are built for e-commerce and retail, try to find a partner that can offer at least some level of configuration specific to government. No government is alike, and no universal platform will fit every government’s needs, there needs to be a certain amount of flexibility and ability to add value from the partner. Payments practices are nuanced and complex and if a payment partner does not have extensive experience with government, it can lead to unnecessary challenges.
Don’t collect too much or redundant customer data. There’s only one best practice for reducing friction at checkout: minimal data collection. Only collect the data that’s necessary for checkout and security. Likely, there was a process leading up to the payment component where a lot of this data was already captured. Modern payment tools accept these types of fields to avoid having to ask the customer for the same information twice.
From integration to security to alternative payment channels, establishing digital payments can be a bit of a challenge. But with the right partner, it doesn’t have to be.
NIC’s payment processing services were built specifically for government and have served our partners for more than 20 years. Currently, NIC securely processes $22 billion annually on behalf of government, and our products and services manage every aspect of the payment life cycle from origination to disbursement to reporting.
To learn more about NIC’s payment processing and our commitment to helping government, visit our payments page.
Sloane Wright is vice president of payments for NIC, a leading digital government solutions and payments company, serving more than 7,000 federal, state and local government agencies across the nation. NIC is a wholly owned subsidiary of Tyler Technologies, Inc.