Abstract–Monetary transaction processing is an essential part of e-governance and provides an opportunity to deliver quality service to stakeholders. Numerous payers face the constraints of time and distance in visiting an organization’s offices for paying their dues on time. This paper provides an introduction to the alternative mechanisms of collecting payments that would have faster realization cycles, and reduce the cost of payment and collection. It is an attempt to recommend an actionable strategy for payment collection which would be smoother and more cost-effective for both the payer and payee.  

Introduction

Many government units have started citizen facilitation centres which offer various services including the receivables collection service. But it has been observed that even these centres are unable to meet the rush of the peak period. The peak period depends on the type of collection, but in all types of collection, the last few days could be described as the peak days. Due to the typical human tendency to keep things pending till the last moment, there will always remains a great rush during last few days.  

But the reverse is also true i.e. during the off-peak period the manpower deployed at these facilitation centres is not fully utilised. The few transactions taking place during this period does not justify the manpower deployed as well as the expenditure made on infrastructure operating expenditure. Due to this unpredictability the efficiency and effectiveness of government offices are difficult to justify.  

With the growth in population and the economy, the volume of transactions handled for tax and fees collection is seeing phenomenal growth. Traditional modes of cash and cheque served well for decades together. But with the escalation in volumes, there is a clear need for alternative modes. 

The goal of any receivables collection mechanism is to receive money

§         As soon as possible after service is delivered or the amount becomes due.

§         With minimal cost of collection. Efforts could be to minimise expenditure on front desk personnel waiting for the entire day for payers to appear.

§         Ideally automatically, without bothering the payer.  

The payer would be:

§         Happier if payment is as effortless as possible

§         Comfortable getting auto-debited, if the biller is trustworthy.

§         More comfortable paying smaller installments rather than a large amount of money once a year.

§         Happier not having to preserve and reproduce the paper receipt of the transaction.

Citizens in general are willing to remain regular on tax payments. It is not the amount, it is the effort put into actually paying it that burdens them. In the cash acceptance mechanism, the payer generally has to withdraw money from his/her bank account , bring it physically to the tax window and pay. Organizations accumulate it till end of the day and deposit it in the corporate account the next day. It is not immediately usable. One or two days of financial interest loss to the organization could result.  

Acceptance by cheque can further delay the realization of the amount. It also carries the risk of getting dishonoured due to insufficient funds. Basically, payment by cheque involves information from payer’s bank to be transmitted to the biller’s bank. Essential information is the payer ID as known to the biller and the amount of bill. An improvisation could be an arrangement with the biller’s bank to accept the cheques from the payers directly at the bank branches which could shorten the realization period by a day.  

Alternative Modes of collection

1.       Bank website bill pay feature

2.       ECS debiting

3.       Card provider site: visabillpay

4.       Mobile phone based payment (GPRS/SMS)

5.       Telephone IVRS

6.       Kiosk accepting payment  

§         Bank website bill pay.

A good many public sector banks and private banks provide Internet banking for their account holders. After logging in, citizens can pay their bill for any of the billers listed on the site. An organization can enrol as one of the following three types of billers:

a.       View and Pay bill: This involves displaying the bill details and accepting payment.

b.       Pay bill: Printed bills can be delivered as usual to the consumer; and the amount displayed on the printed bill can be paid on the bank’s site. An organization need not show the bill details online in this option

c.       Payment only: It is a discretionary payment from the citizen. It could be a contribution towards a cause or it could be a request for subscription for a paid newsletter or periodical published by the organization.

Pay bill option can be used by organizations which generate time-based bills and the billing amount does not vary on consumption. Municipal property tax collection for a property can consider this option.

Target Audience group: Any person with an Internet banking account can opt for this.

Costs to users: Some banks provide it free to users; others may charge a small fee.

Costs to organization: One time setup fee and nominal maintenance fee depending on the float with the bank.

Setup: Adding an organization as a biller organization on the bank’s site and setting up a collection account .

A variation to bank bill pay is the direct third party transfer from one to another account of the same bank or other bank. Net banking sites of some banks allow a comment field while making third party transfer. Unique consumer ID can be fed by the consumer while making the transfer. This comment field is also visible in the transaction details of the recipient organization. Based on this deposit transaction, the payment can be acknowledged and a digital or printed receipt can be generated and delivered to the user.

This mode can be used with employee-consumers and other known stakeholders to begin with. Payers can also schedule future money transfer to avail of any early bird rebate or freedom from remembering to pay at a particular due date. At the consumer end, this could help them plan these payments in their household annual budget or their business budget; which may also need to be shown in their own income tax returns.

§         ECS debiting

The uncertainty in incoming fund flow makes finance planning more difficult. In such case, if services like ECS are put in place and if sufficient numbers of citizens opt for such services, the fund flow can be made more predictable. Moreover, the manpower engaged in the front end collection activities can be utilised elsewhere. 

At times, the tax recovery rules permit collection of taxes at interim periods during the year. As per financial circumstances of the payer and the volume of dues, the number of instalments can be arranged for auto debiting similar to repaying for leased asset procurement. Since there is no user-driven action for each instalment, increase in the frequency of transactions does not require visits.

Many organizations are already conversant with paying employee salaries by ECS crediting. This works by debiting a single account and crediting multiple account s. Adoption of ECS debiting for receiving payments would be a natural incremental learning for organizations. This involves debiting multiple account s of payers and crediting the organization's account . Chances of failed transactions are likely to happen due to the possibility of insufficient funds in the payer’s account. However, alerting the citizen by SMS beforehand can mitigate such cases.

Target Audience group: Any person with a bank account can opt for this.

Costs to users: No recurring cost to be borne by the user.

Costs to organization: Reduction in costs compared to manned civic center counter. Intermediary organizations offer routine processing services for this mode at nominal extra amount.

Setup: Preparation requires getting an ECS mandate form signed by the tax payers once and getting them verified by their banks and sending them to a sponsor bank, which needs to be appointed.

ECS debiting is similar to taking signed post dated cheques from citizens and debiting their account s as and when an organization raises a bill/demand without citizen’s intervention each time. Receipts would need to be printed for successful ECS debiting and delivered to the citizens. Digitally signed pdf-type receipts can be emailed as alternate means. This can be done as a pilot for a suitable subset of people for observing the operational streamlining.

§         Card provider site

Credit/debit card providers like Visa provide bill payment facility for their card holders. Once the user receives the bill, one can visit the payment website (E.g. http://www.visabillpay.in), provide the consumer account number of the biller organization, enter the bill amount, and provide the credit/debit card details. Details are then confirmed and the transaction is completed. The entire transaction completes in seven steps.

A user can optionally register with the site, enlist the billing organizations, get email alerts on new bills and keep a log of bills paid through the site.

§         Mobile phone based payments

Banks have integrated mobile phone based payments. Mobile phones have unsurpassed ubiquity. mChek,[1] Atom technologies and other such organizations provide payment facility through GPRS or SMS from a mobile phone.

Setup involves enabling the payment gateway service. To the citizen, it gives the possibility of anytime anywhere payment and overcomes the barriers of time and space.

§         Phone IVRS based payment

Service providers are available who effect payment transaction entirely by Interactive Voice Response System (IVRS). Confirmation of transaction appears on the credit card bill or bank statement. This mode can be useful even for local language speakers.

§         Kiosk accepting payment

Self-help kiosks are now becoming popular. In addition to their use in querying and information access, they can be used for effecting payment transactions. For this, the kiosk can be equipped with a Magnetic Stripe Reader (MSR) for swiping credit/debit cards and/or Magnetic Ink Character Recognition (MICR) for reading cheque information. A thermal or mini printer can print out the transaction receipt. This can make the physical visit to the kiosk more productive.

Conclusion

It is not too difficult to start alternate payment channels. Ample options are available to suit specific needs of the organization and target customer groups. New and young finance companies like mutual fund companies make almost all collection channels available for the customers to invest. Government organizations can build upon their decades of experience by adopting these modes. To cite a routine example, a typical household buys about Rs 25 of milk everyday, totalling to Rs 750 a month and Rs 9,000 per year. This is hardly noticed as a significant expenditure, whereas a property tax of Rs 2,000 is considered as a payment exercise by the citizen. The difference is the ease in transaction and the door-step delivery and collection. Adoption of the mechanisms discussed would also encourage payment from known sources of income.

Acknowledgements

§         Citizens of Surat and Surat Municipal Corporation officials for providing an opportunity to deliberate on their convenience.

§         Public and private bank officials and payment systems service providers for helping in understanding facets of collection systems.