Delivering choice and making citizens’ lives easier: the expanding opportunity for digital citizen pay

By on 05/12/2022 | Updated on 05/12/2022
A screenshot of the Istanbul Senin super app
A screenshot of the Istanbul Senin super app

From facilitating ‘thank you’ payments to Minnesota’s frontline workers in the pandemic to the development of mobile apps enabling Istanbul residents to pay for services and transit, technology is changing how government transact with their populations. Experts share insights on how modern payment systems can drive efficiencies and improve citizen trust.

Governments have faced a series of crises in recent years, with many of these – the coronavirus pandemic and the cost of living crisis chief among them – requiring them to develop payment and support schemes at an unprecedented speed.

During COVID-19, for example, many governments developed schemes to support those who had been furloughed during national lockdowns, while to help citizens amid the current high levels of inflation, many countries’ administrations have made payments to help with the cost of fuel.

To discuss how governments have responded to these issues, Mastercard brought together a panel of expert public servants from around the world to find out how payment and support systems can keep up with increasing demand and expanding citizen expectations.

Opening the webinar, Jennifer Duncan, vice president, government innovation, at Mastercard, highlighted that Mastercard’s government team works with the public sector in 60 countries. “Right now we’re very aware of the inflationary and recessionary challenges that you’re all facing, making optimising digital payments and the benefits they bring to the public sector increasingly important,” she said.

During the peak of COVID-19, Mastercard worked with governments to protect the wellbeing and livelihoods of citizens and businesses. “They did this by transforming the way they transacted, often moving from physical to digital,” she said. “They were delivering vital welfare payments to alleviate hardship, they were delivering credit lines to keep small businesses going, and economic stimulus to mitigate the impact and accelerate recovery. Pensioners and the vulnerable were able to stay at home, school children were fed and educated, and businesses continued to trade.”

As we are now in another period of economic turbulence, Duncan said it is again important to consider how best to deliver vital payments to citizens, as well as how digital payments can be utilised to help fund the public sector through timely payments to the state.

“Digital payments also present an opportunity in the footprint they leave behind,” she added. “More transactions pass through our network each day than there are searches on Google. Not only do these transactions enable the digital economy, they generate anonymised and aggregated data, which form actionable insights. Many governments working with us have been using these insights to understand what’s happening on the ground.”

Delivering ‘thank you’ payments to frontline workers

Other webinar panellists expanded on these themes. Tyrone Spratt, chief business technology officer, agriculture, at the Board of Animal Health and Labor Industry in the US state of Minnesota, discussed how the state developed a scheme to make payments to those who worked on the frontline during the pandemic.

The payment programme was created “as a thank you in recognition of those frontline workers who put their lives on the line to ensure that the state continued to function”, Spratt said.

Tyrone Spratt

The state’s governor Tim Walz signed the bill to create the payment on 29 April 2022, to distribute US$500m to eligible workers as quickly as possible.

“We took about 35 days or so to open up this application process, and we went live with the actual programme on 8 June,” Spratt said, illustrating the quick turnaround.

In total, 1.2 million Minnesota residents applied for the programme, and just over a million were found to be eligible recipients of the payments.

Reviewing the programme, Spratt shared a number of reflections on how it was delivered at such pace.

“We really had to come together across three different state agencies to stand up an application to assess eligibility as quickly as possible, then be able to determine that eligibility, support applicants through the process and make the payments.”

Among his reflections were that it is important for suppliers to work closely with government “at the very beginning” of projects.

“What we’ve learned throughout the contracting process is there’s a real need to come together with all the various parties and really work to the last detail of how the programme is going to work.” This includes clarity on schedules and timelines, as well as what risk providers will accept.

Spratt said that there was “probably two weeks of intensive work” to get solid agreement with suppliers and vendors, but it laid the groundwork for collaboration throughout the programme.

Clear cooperation was also needed as the state government and private sector providers needed to define how the different partners would support applicants, with Spratt noting that “those vendor partners in essence become an extension of Minnesota state government”.

“Citizens, at least in Minnesota, would have seen no distinction between the different partners,” he said. “We all had a vested interest to do this programme well.”

 A robust and transparent partnershipwas also key to tackling fraud, which was a big risk in a programme of this size.

Spratt’s advice to public sector organisations developing new payment schemes is to “really think at the beginning about how do you make sure that we’re all one team supporting the applicants”.

A super app for super services

Another example of how public services can be transformed by technology was shared by Hakan Kaplan, the project coordinator of the Istanbul Super-App, which brings together a host of services into one application.

“We’re quite lucky because we live in a magnificent city, but it’s a crowded city – it’s a city of 16 million people,” said Kaplan, explaining the development of the application. “We have a mayor called Ekrem İmamoğlu, [and] he is committed to transforming the city digitally, so that’s why he has launched the first super app programme of a mega city like Istanbul.”

Hakan Kaplan

The application was launched at the beginning of 2022, and has now reached about 1.5 million users.

The app brings together all the functions of the municipality into a single application, Kaplan said, to provide more streamlined and integrated services.

“We wanted to launch a programme where people could log in with two factor authentication – as secure as a bank with a secure ID – and we wanted it to make lives of the citizens of Istanbul easy.

“So that means once they are logged in, they should be able to pay their bills very easily with one click, they should be able to pay to get onto a bus, and they should be able to pay their parking spots.”

Other functions include being able to search job vacancies in the city, check late night pharmacies, and a digital wallet to store both the city’s travel cards and individuals’ own bank cards for easy payments. Future developments in the pipeline include companies being able to join the app’s marketplace, so “the manufacturers of Istanbul will be selling their products to the citizens of Istanbul”.

“It has made lives of citizens of the city easier, and it also brought a sense of sharing as [on the app] now people can ask for support from others,” Kaplan said.

The platform allows individuals to pay the bills of people who need help, with the transactions kept anonymous. “This platform became the tool for people to share with each other their generosity, so it became a tool for social support as well.”

Public sector payments progress

The session also heard from Alexander Bunch, who is leading the development of the Scottish Government’s payment service to improve payments across the Scottish public sector.

The project began in September 2018 to explore the potential to centralise and standardise the way payments are made and received across the approximately 150 public bodies.

Alexander Bunch

“What we’re aiming to do is to deliver a common capability, which can potentially save the government millions of pounds through becoming the go-to service for public sector transactions in Scotland,” Bunch said.

The system is being developed to be agnostic to the organisations that use it, Bunch said.

“Most of the organisations we work with have got their own central systems to manage interactions with citizens and businesses, and usually, these systems are difficult to replicate and can’t necessarily be shared.

“But when it comes to the action of making and receiving a payment, the customer journeys are essentially identical. So we know there’s a remit for common components.”

The payment service can also take away the complexity of interacting with banks “so that public bodies can then focus on delivering their core business”, Bunch said.

The system was launched in June this year with its first customer, and at the time of the webinar was onboarding its second.

The pace is being kept slow in order to “build resilience and robustness”, Bunch said, and so far, the system has demonstrated that it can receive card payments, make overseas payments, as well as make payments in vouchers or on prepaid cards.

“By this time next year we should be in a position to streamline onboarding for multiple organisations,” he highlighted. “We’re still on the journey. And there’s some way to go, but what we’ve got is a working transactional core, a bit like the parts a bank would have for regularly making bulk payments.”

Tools to tackle fraud

Anand Menon, Mastercard’s vice president and global head of government solutions and an expert on citizen pay, discussed some of the benefits that governments can get from transforming their payments systems.

Motivations for government include unlocking fiscal benefits through lower cost transactions, improved security of government payments and helping to tackle fraud and error.

Indeed, Menon highlighted that action to tackle fraud and error was particularly significant. “It’s really the centre of the heatmap,” he said. “It’s not that digital solves all fraud, but there are aspects of digital when done correctly that will help minimise the most obvious and blatant fraud.”

Anand Menon

How digital payments processes can help to tackle fraud was a major point of interest from the audience.

Asked about how he would review fraud prevention in Minnesota’s COVID thank you payments, Spratt expanded on what he called the “three buckets” of the process, covering eligibility, identity fraud, and financial fraud.

“We looked at those different scenarios – and they’re not clean, there’s some overlap – but we really tried to look at those three different buckets and try to think through the scenarios, and what are the things that we should be on the lookout for.” This thinking was then shared with other agencies in the state, and was successful in denying tens of thousands of applications, but Spratt acknowledged that “we probably didn’t get it all”.

However, the process has now led to work about how to share best practice across the state government.

“This was our first take of working across multiple state agencies [to determine] what does fraud look like and how do we prevent it.

“Right now, I’m looking at the learning from our programme and how do we establish some best practices from a state perspective, or some minimum standards that we might want to deploy. We’re thinking through how do we share those best practices and how do we maybe establish some standards that can be followed for others that [follow] in our wake.”

Kaplan contributed to the topic, explaining  the Istanbul super app’s security architecture on the KOBIL technology platform, which is highly rated for internet security, and therefore has not faced any problems around misuse or fraud to date. But it is an issue that he is keeping an eye on as the transaction sizes on the platform increase as the e-commerce usage expands.

Ensuring digital is inclusive

Another important topic the panellists addressed was how to ensure digital payments systems are inclusive.

Menon said that there was a need for government programmes that are ‘digital first’ to still have offline options, what he called “a digital backbone with physical touch points”, because there is still a digital gap in some countries that makes accessing online services difficult, such as in emerging markets.

Bunch said that the Scottish Government’s payment system was agnostic as to whether payment is made to a bank account or by an alternative method like voucher, to help ensure services can be provided to people without bank accounts.

But there is a lack of awareness of the alternative options, he said.

“The real challenge from that point of view is how to encourage take up – either how to provide bank accounts to people who don’t have them, which I think ministers are particularly interested in, but also how to make people aware that the government has got the solutions.

“We think a lot of people are eligible for benefits, but don’t apply for them because they don’t think that they’re going to receive the money. There’s a communication issue, from our point of view, to make sure we get the message across to people, and what Anand was saying about the physical touch points is really important. Technology is not going to solve everything from that point of view.”

Spratt said it was important that as part of the payments programme, Minnesota ran an outreach programme with other parts of the state and local governments, as well as holding signup fairs across the state in areas where there was likely to be concentration of frontline workers, such as in hospitals but also in places like meatpacking plants. “Outreach, outreach, outreach is key to bring your programme to the people so that you can again maximise the number of applications you get.”

Looking to the future, Menon said government programmes can also help close access gaps by galvanising an ecosystem around digital payments.

“If a lot of payments are going into rural areas, for example, that’s a lot of people who suddenly have a digital instrument in their hand who want to transact, so it’s a great call out to merchants and entrepreneurs in the area to start to accept digital payments.

“That’s where I think we see a lot of partnerships and using the programme as a catalyst for change can actually be a really strong way to tackle the access challenge as you go forwards.”

“Citizens today are digitally, extremely savvy,” he concluded. “I think there’s going to be an increasing shift towards enabling citizens to make choices in terms of how they want to receive payment, and governments leveraging technology to better manage those choices for citizens.

To find out more, you can watch the full Streamlined support: bringing government payments into the digital era webinar on our dedicated event page. The webinar was hosted by Mastercard, with support from Global Government Forum, on 15 November 2022.

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