New Ways for Councils to Collect Payments
Local governments depend on revenue from local people, to support local services. In England alone, councils will spend £95.4 billion on services including education, housing, police, social care, libraries and waste collection in 2015-16.
As we know, central government pays for 59% of this, but the rest comes from business rates, council tax and other revenues. The onus is then on councils to collect these payments in the most cost effective, rapid and customer-friendly way.
There was a time when councils received money by cheque, standing order, and cash. Council tenants, residents and local businesses might visit their locality office to make payments. But times have changed. Businesses and residents want to make payments in ways that suit their lifestyles and use the technology that has become an everyday part of our lives.
In most places across Europe, you can pay your council bills with a credit or debit card (often over an automated service), online, or with a bank transfer. These were seen as innovative payment methods introduced in the late 1990’s, but technology and consumer habits are, once again, evolving.
New Payment Options For Local Businesses And Residents
Paying a bill direct through a bank is no long the only option a customer will consider. Over the last ten years, a proliferation of new options has emerged.
These include web and app-based services, such as PayPal; to app and smartwatch enabled newcomers, like Apple Pay. Money transfer services are also increasingly popular, with high street banks launching branded versions, including Barclays Pingit, amongst others.
Consequently, customers expect speed, flexibility, a wider range of options, a high level of security and the ability to pay wherever they are on any device. At the same time, there are strong budgetary reasons why councils would benefit from modernising payment options. Contact centres and letters are still a normal part of most councils’ collection processes. When council budgets are being squeezed, using surplus funds or relying on central government grants, there is a case to be made for greater flexibility, when it comes to collecting the revenue that keeps local services running.
In the budgets of councils around the country will be the true cost of revenue collections. From payment processing software to bank processing fees, to contact centres, telephone lines and hundreds of thousands of letters. All of this costs money. All of this could be done easier, quicker and more cost effectively. Equally, consumers and businesses would welcome more ways to make payments since it will save them time and money.
Providing people with convenience and choice in the way they make their council payments, results in prompter payments and less time spent chasing monies owed.
Cost Savings In Mobile Enabled Tech
Given our reliance on smartphones, providing app or mobile-enabled payment options for the major mobile platforms (Apple iOS & Android) would be a promising start.
Digitalising the letters councils send, in the same way that banks now offer paperless statements, would not only save councils millions, but it would mean customers would have access to account details on their phones. These paper-centric world councils often operate from, is outdated and delays the time it takes between a customer being asked to pay and payment being made. Twenty-four-hour automated numbers help alleviate this, but the ability to pay on a smartphone with a few clicks would eliminate it altogether.
Outdated Payment Methods Exclude Residents
Even in developed economy cities, there are millions without access to financial services. According to MasterCard there are 93 million unbanked consumers in Western Europe.
Non-government organisations, such as the Bill & Melinda Gates Foundation, as well as the UN, IMF and World Bank are all working to solve this problem; but here at home, we already have the tools that can make life easier for those without access to financial services. Smartphones and the various payment services that are easy to download, usually free and don’t need customers to have a bank account. Phones themselves can act as a bank, savings account and credit card.
Councils offering a wider range of payment options would ensure those currently excluded from financial services – the unbanked – to make digital payments, thereby negating the need to take cash payments from this group.
For councils and those they serve, the businesses and residents within a town, city or borough, the modernisation of payment options comes with numerous benefits.
• Save costs on service delivery and collections, including contact centre / locality office, letters and payment processing.
• Provide customers with more up to date options, including smartphone and money transfer services.
• Ensure the unbanked can make digital payments and reduce the amount of cash handled by council offices.
If you would like to discuss the content of this post and what tools are available to help your council or organisation optimise their payment collection processes, please get in touch with our team.