Digital payments are quickly becoming the norm for nearly all types of consumers. In fact, you would be hard-pressed in today’s world to find a retailer that does not offer at least one form of digital payment. And while government agencies haven’t always kept up with the private sector in adopting the latest technologies, more and more public entities are joining the digital payments revolution.

And it’s no wonder why. Digital payments are widely trusted and have become firmly embedded in customers’ habits. They’re going to continue gaining popularity—nearly half ( 43% ) of all payments in the U.S. and Canada in 2025 will be cashless—and use among all industries is expected to explode in the coming years. In fact, a recent study from Juniper Research determined that the number of unique digital wallet users will exceed 4.4 billion globally in 2025. That’s a nearly 52% increase from 2.6 billion unique users in 2020.

And while digital payments primarily improve the customer experience by providing a convenient and secure way to pay, they also provide the departments and agencies that offer digital payment services the opportunity to convert in-person users to more convenient and inexpensive channels. What’s more, the right digital payments platform can help governments mitigate the risk of fraud and cyberattacks. It’s a win for everyone.

On the other hand, public entities have historically been slower on the uptake. As of 2024, just 4.9% of local governments had implemented online payments. Between concerns with personnel resources, budget, compliance and cybersecurity, governments have historically been skeptical of the value that digital payment options would bring to their constituents.

Government Digital Payment Solutions

Fast forward to now, as government leaders become increasingly excited to explore digital payment options. Many cities have begun exploring digital payment options, while others have already gone digital and are even looking for expansion options within their newly adopted platforms. Let’s take a closer look at the roadblocks to adoption and what’s at stake for elected officials and their constituents.

For a while, concerns about credit card fees and integrating digital platforms with existing, older processing infrastructure slowed local and regional governments’ embrace of government digital payment options. But that landscape has changed, and digital payments options will continue to become less cost prohibitive—especially as government entities tally the cost savings they can realize by automating payments and reducing in-office employee hours dedicated to check processing.

In addition to opening opportunities for more payment receipt methods, taking digital payments generates data that government agencies can analyze to help them form a holistic view of all constituent transactions. This data tracking and analytics enables departments to create a more seamless experience for paying constituents. For example, account owners can log in to one portal and see all account balances and schedule payments. They can also opt in to receiving automated text reminders about payment dates.

While governments offering digital payments might promise a seamless experience and a path to modernization, there is one obstacle government agencies need to overcome: the security of personal information.

Overcoming Security Issues with the Right Digital Government Payments Platform

Governments collect and store some of the country’s most sensitive data and are visible targets for cybercriminals both domestic and abroad. That’s why protecting sensitive information is easily government agencies’ top priority: ensuring this information is kept safe is a matter of national security. Concerns about cybersecurity and damaging data leaks have made many local and regional governments ultra cautious about adopting digital payment options. But despite these challenges, government agencies must find a secure solution.

Most importantly, they need to pay attention so they:

• Ensure adherence to compliance measures. Payment Card Industry (PCI) and National Automated Clearing House Association (NACHA) standards dictate how businesses collect, store, and work with sensitive constituent information. Any digital payment solution will have to check off these boxes.

• Uphold the public’s trust. Constituent confidence is directly related to the feeling of safety when making digital payment transactions. Attention to security will fortify defenses and help to develop and retain constituent confidence.

To navigate this concern with caution, government entities should partner with a trusted payments provider who can protect constituent data while ensuring seamless digital payment offerings. Fortunately, there are many technologies available to prevent hacks and provide secure payments. Governments should ensure the digital solutions they adopt include cybersecurity protections like end-to-end encryption, multifactor authentication and tokenization.

From there, the digital solutions provider establishes clear lines of communication with constituents to help them understand the measures in place that ensure the security of their data. Not only does this bolster constituent trust, but two-way communication can allow constituents to flag phishing schemes and scams they receive from fraudsters. Scammers that pose as government entities to gather payments are common, unfortunately. With an open line of communication and these security must-haves in mind, governments can act against fraudsters and stop them from doing more damage.

Resource Allocation: Digital Payments Payoff

Resource allocation is a significant concern for most government agencies, especially in volatile election years. Adopting cutting-edge technologies that prevent hacks may be an obvious expense for a large e-commerce brand, but government purchasers are under extreme scrutiny and the consideration and purchase processes necessitate a longer and more detailed approval procedure. However, there are clear benefits to adopting digital payments capabilities. In many cases, the technology pays for itself in the long term.

With more digital integrations, like a user-friendly customer portal and automated text messages to remind residents of upcoming payments, constituents are more likely to pay their bills on time. As a result, your department can limit constituent frustration around late fee charges, save resources on resolving complaints and reduce the time it takes to issue late notices.

The COVID-19 pandemic made digital and touchless experiences vital for immunocompromised residents and critical for the health of all. It’s important to note, however, that maintaining traditional payment methods is also crucial to accommodating all demographics and needs. With more tech-savvy consumers and a younger, digitally fluent population, offering the option of digital payments while still accepting more traditional forms of payment helps create a more seamless and positive experience for more people from more walks of life.

Increased digitalization also reduces the need for personnel to manage payments, allowing governments to reallocate staff to more strategic and impactful departments and missions. Government leaders can even reduce manual processes and simplify reporting activities, allowing the department employees to focus their attention and resources on activities that positively impact their communities and improve the constituent experience and bridge a closer and more fluid connection with residents.

All said, elected officials have a real motive to meet this demand from constituents, and the reasons for government entities to hesitate to adopt the latest and greatest in digital payments solutions are quickly vaporizing. The ability to implement and carefully manage these solutions will be important to maintain constituent goodwill, generate revenue, and provide greater accessibility now and into the future.

Are you ready to offer your constituents the payment experience they expect on their channel of choice? Contact one of our experts to take the first steps toward implementing CSG Forte’s multichannel payment solutions to transform your payment processing.