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LEARNING SERIES >> Our learnings from digitizing P2G payments in a customer-centric way

© ©Better Than Cash Alliance

Our previous blog reflected on learnings from engagements with member countries on tax digitalization.

Now, we explore the digitization of non-tax revenue people to government (P2G) payments. The digitization of non-fiscal P2G payments includes utilities, license fees, passport processing, and identity verification, and is increasingly important to reduce transaction costs and provide faster, more convenient, and transparent services for citizens.

Perhaps surprisingly, our members’ P2G payment digitization journeys have shown that technology itself is ultimately only one factor in achieving success. Enabling policies, clear processes, and user-centric products are, however, crucial. From our work on water utility payments in Ghana, we learned that user trust can be built through accurate and timely billing; transparent and verifiable transactions; and quick and responsive recourse mechanisms – all ideally supported by an automated customer relationship management (CRM) system. A robust and comprehensive change management process is also key to onboarding both internal and external stakeholders in the digitization journey.

Overall, three key learnings emerged from our engagements:

  • Secure cross-sector commitments and a supportive policy framework
    Determined leadership from the government, and a commitment to innovation and cross-sector collaboration, is essential to drive digitization.

    In Latin America, adopting Treasury Single Accounts (TSAs) and digitizing revenue collection and payments has enabled governments to standardize and simplify their operations; make faster financial transactions; optimize budget execution; and significantly reduce treasury management costs. Our report on Maximizing Government Cost Savings suggests that improving treasury management by implementing these changes could generate potential annual savings of US$1.1 billion (approximately 0.15 percent of total tax revenues) for Latin American Government Treasury Forum (FOTEGAL; Foro de Tesorerías Gubernamentales de América Latina) member countries.

    Active coordination among stakeholders can help reduce transaction costs and enhance operational efficiency, but roles and responsibilities must be clear for all. In Colombia, the Boton PSE is a platform developed by the banking sector and a private clearinghouse, ACH Colombia. Users pay for goods and services online, transacting directly with bank accounts. This is an excellent example of public-private collaboration to provide payment solutions for various purposes like municipality taxes and fees, utilities, and taxes in general.

  • Invest in appropriate, reliable customer-facing technology
    To build payment infrastructure that works for all, leveraging existing technology and partnerships can be an efficient means of procuring equipment and devices, negotiating mobile network operator service rates and securing funding. Investing in an automated CRM system and an easy-to-follow automated customer complaint protocol are crucial to building confidence in the institution and its products.

    Water utility companies in Kenya invested in a CRM platform (Maji Voice) that helped build trust with consumers through improved response time and service delivery. At Nairobi City Water and Sewerage Company Ltd, resolution rates climbed from 46 percent to 94 percent, while resolution time halved.

    In 2019, the Central Bank of Mexico (Banco de México) launched CoDi, a digital payment platform that uses a quick response (QR) code to generate a digital payment. The transaction occurs directly to/from the parties’ bank accounts, without intermediaries, and free of charge to both. By aligning with state and local government payment policies and connecting with local banks, CoDi allows people to pay for government services like water, electricity, and taxes.

    In Rwanda, Irembo offers over 100 services from 20 government institutions, and is a one-stop digital platform for citizens covering service application, payment, application tracking, and processing. It gives access to over 4,000 network agents across the country, and has helped to accelerate the digitization of P2G payments in Rwanda, with over 17 million transactions already recorded.

  • Improve the user experience and design for a range of client needs and capabilities
    Digitizing P2G payments impacts users with varying levels of financial literacy and digital capabilities. Governments should therefore work with service providers to ensure the design of products and services considers the lowest capability segment so that everyone’s needs can be addressed.

    With Ghana Water, we learned that vulnerable consumers – particularly older women with low levels of literacy – struggled with lengthy USSD menus. Simplifying menu navigation and using audio-visual instructions and local language can be effective in onboarding consumers in an accessible way.

    Providing choice in payment methods also improves users’ experience and encourages adoption. In 2018, the treasury of the Dominican Republic launched SIRITE, a payment platform to receive, centralize and record public revenues more efficiently. Users can pay for passport renewal fees, register real estate and certify education records, among other public services. This cost-efficient gateway also accepts debit and credit cards, enabling users to choose their preferred payment option.

Clearly, successful digitization of P2G payments and its widespread adoption by users is achievable – but depends on the alignment of various important factors. An effective change management system is crucial, as is securing buy-in from staff and ensuring that all segments of users are included in the transformation, so that digitization is truly inclusive. Shifting from cash requires a compelling value proposition, and that can be realized by implementing the UN Principles for Responsible Digital Payments throughout the digitization journey.