How payments become the building blocks of Smart Cities

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CityBase would like to eliminate the significant difficulties consumers face when paying bills to government entities — and in doing so, lay the foundation of a more digital form of conducting business.

Even those agencies that accept payments online are often disconnected and have some manual elements to their processes, but all of this can be streamlined in a way that allows residents to more easily address their business and residential obligations.

"At a high level, we are working to make government more personal and responsive, which is creating a differentiated service to individuals and businesses based on their needs," said Mike Duffy, CEO of Chicago-based CityBase.

Payments are at the core of such a vision for CityBase, as it works with government entities to streamline their incoming revenue processes in a way that introduces mobile or digital payment acceptance at kiosks, the point of sale or online.

It puts CityBase right where it wants to be — at the foundation of the growing movement called Smart Cities in which government bodies and agencies move toward interacting with residents through connected devices.

"In the past few years, we are seeing an effort to consolidate payment technology by cities' departments of finance or technology to economies of scale from a credit card processing standpoint," Duffy said. "Payments are becoming the origin of transformation in government technologies because it is one of the few necessities that covers all agencies."

It's a trend not lost on investors who see the move to digital payments and Internet of Things as the gateways for cities to better serve their residents through connected devices.

"We've been seeing more on the venture capital side of our business the last three or four years on the digitization of payment," said Larry Berlin, vice president with Chicago-based First Analysis Securities. "Cities are trying real hard to collect revenue faster and save money at the same time, because they are on tight budgets."

Many aspects of operating a city and providing services to residents would be suited to convert to digital payments, and all at less expense, even after interchange fees, Berlin added. "It also allows cities to make better use of their employees," he said.

In its own research, CityBase found that 80% of city service providers would like to digitize payments, but many fail because other aspects of the payment process are not yet digitized, such as applications for licenses or government regulatory information.

It would be best when moving payments online for them to be consistent with all other agencies in the city, Duffy said. "But unless they can move the manual process prior to a payment or migrate it to a digital service, they can't get that payment online," Duffy added. "In that way, payments are a conduit to get these other things done and to go about standardizing the technology."

CityBase functions as the catalyst for such change, working in a white-label fashion to provide the underlying technology for a government agency seeking improvements at the point of sale, on the web, at a kiosk, or in communication protocols — covering both payments and communication aspects, such as converting PDFs to digitized menus.

From CityBase's viewpoint, the "smartest city" is one in which a resident can apply and pay for a business license digitally and, at the same time, pay the water bill. During that process, the resident might also be reminded that a child's school registration fees are due, Duffy said.

"That's the potential of bringing together agency services in a common manner, bringing together finance and technology," Duffy added. "It's far better than having government information stored in agency or application silos."

The best presentation for government payments is one in which specific information is organized around a household or business, providing an easy dashboard to keep track of the payments and information that matter to a resident, Duffy said.

It all essentially boils down to better customer service for a city's residents, First Analysis' Berlin said.

"Some residents pay a bunch of different bills electronically, so we are seeing some movement toward consolidating that," he added. "Cities move slow on change, but the difficulty in finances is motivating them to do it."

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Online payments Internet of things