The Clearing House - Real-Time Payments - March 2022 - Find out how adopting ACH transactions can put businesses and consumers on the fast track to seamless digital payments

Local and state governments tend to deal with an overwhelming amount of paperwork when it comes to payments and the remittance information surrounding them, so it’s perhaps no surprise that they often seek out tools or solutions that can make these processes easier and more efficient.

Government treasuries and other agencies have long been used to processing taxpayer and business payments by paper check. When Automated Clearing House (ACH) payments entered the scene, inertia and familiarity initially caused many businesses and consumers to continue to stick to checks to pay their taxes, license renewals, professional certifications and other costs. Even many of those receiving government income, such as Social Security benefits and workers’ compensation, opted to receive paper checks in the mail each month rather than switch to electronic payments.

The march to ACH adoption has been underway for years, but the pandemic has dramatically accelerated it, as social distancing has prompted consumers to stay home and businesses to reassess their accounting and payment processes. . Offering disbursements via ACH has become an increasingly attractive prospect over the past couple of years, as it maintains health and safety protocols and minimizes the number of staff needed to visit offices and process paper-based payments.

“There has been discussion for years about whether benefits should be paid electronically into people’s bank accounts or should we really be cutting checks right now,” said Beth Dwyer, deputy director. of Financial Services at the Rhode Island Department of Business Regulation, at PYMNTS. in an interview. “They are still [cutting checks]but I think you’re going to see more and more people going electronic, as we’ve seen the effectiveness of it throughout the pandemic.

Dwyer’s office, which oversees a multitude of business transactions in Rhode Island, receives payments from companies in the state as well as across the country. Mortgage payments, insurance payments, business license renewals and bank reconciliations are just a few of the many tasks the office handles, and ACH payments and other electronic methods have simplified and streamlined these tasks, she said. They also dramatically reduced paperwork and the number of people needed to process information.

“We’ve been pushing for over a decade in Rhode Island to have all of our documents filed electronically, and that includes things like financial statements and all kinds of things we want…electronically,” a- she said, adding that her office also lacks the physical space to store documents and keep copies, which makes electronic storage much more preferred.

Eliminate potential misconceptions about ACH

Many state government agencies continue to work with paper checks because the method of payment leaves a literal paper trail, and their anti-fraud processes and methods focus on tracking these manual payments. Electronic filings require different support and processing systems, and many organizations have been reluctant to make the switch.

However, the pandemic has reduced the number of employees available to cut checks and verify identity in person, and payment recipients have also warmed to the idea of ​​accepting payments through ACH. Dwyer explained that switching to ACH has, in many ways, made the accounting process much more efficient, and she said she believes ACH payments will continue to play a bigger role in government business in the future. . Rhode Island now accepts about 96% of its applications and fees electronically, for example, but it said it took time to get to that level of acceptance.

Continuing to drive its adoption by the public will likely require additional outreach and education about the benefits of the method. It may also force officials and those offering the payment method to dispel myths, no matter how outlandish they may seem, such as that the government can “just walk in and steal all the money from their bank account”, explained Dwyer. Taking a soft approach to promoting the benefits and security of ACH payments has helped consumers go electronic at their own pace and for the long term.

“I think it worked well not to impose it from the start,” she said. “If it’s scary and you’re forced to do it, you’re going to have adverse reactions. You can’t force that on people. And I think just the fact that it wasn’t forced meant that more people accept it.

Governments, businesses and consumers are gradually beginning to realize the benefits they can derive from supporting and using electronic payments, especially ACH transactions. Familiarizing them with using the payment method could also be key to fostering increased trust as they move towards faster real-time systems and other innovations in the years to come.