Transforming City Hall: The Case for Going Digital with Municipal Payments

Author: Chad Jarvi, President at Caselle, Inc.

September 12, 2025

Executive Summary

Cities, local governments, and special districts are under increasing pressure to do more with less while providing residents with the seamless, digital services they expect. Yet, many cities still rely on paper checks, manual processes, and in-person transactions for utility bills, permits, property taxes, and other payments.

Read: Paper-based payments are gone for good: What state and local governments need to know

Digitizing payments transforms these outdated processes into secure, efficient, and resident-friendly experiences. A modern digital payment solution helps cities increase revenue collection, reduce administrative costs, improve compliance, and elevate resident satisfaction — all while empowering municipal teams to focus on higher-value priorities.

This article explores the need for digital transformation, common challenges with paper payments, key benefits, implementation strategies, types of digital payments, and key features to look for in a digital payment platform.

Why Cities are Moving Toward Digital Payments

Across the nation, municipalities are prioritizing e-government initiatives to improve service delivery. Citizens now expect the same convenience and flexibility from their city that they get from their bank, utility provider, or favorite retailer.

Key drivers include:

• Changing resident expectations: Citizens want online methods to pay and manage accounts.
• Operational efficiency: Smaller budgets and leaner staff mean cities need smarter tools, not more labor.
• Digital-first mandates: Federal and state initiatives encourage modernization of resident-facing services.

Bottom line: Cities that adopt digital payments deliver better service, faster collections, and improved financial stability.

Challenges with Legacy Payment Processes

Despite growing demand for online services, many municipalities still rely on outdated payment methods. These create pain points for both residents and city staff:

For Residents

• Limited payment options and office hours
• Inconvenient trips to city hall
• Long wait times for confirmation and receipts
• Lack of transparency into account balances

For City Staff

• Time-consuming manual reconciliations
• Higher error rates and missing payment data
• Increased compliance exposure when handling sensitive payment details
• Payment fragmentation. Disconnected systems across departments (utilities, taxes, permits, etc.)
• Costs tied to paper bills, mailing, and in-person processing

Result: Staff burnout, frustrated residents, and slower collections.

Benefits of Digitizing City Payments

Modernizing your payment processes isn’t just about technology — it’s about improving the entire resident experience while enabling city staff to work smarter.

For Residents

• Convenience: Pay anytime, anywhere from any device.
• Multiple Payment Options: Credit, debit, ACH, Apple Pay, recurring auto-pay, and more.
• Faster Service: Immediate confirmations and real-time access to balances and receipts.
• Transparency: Residents can track their payment history and see exactly what’s due.

For Municipalities

• Streamlined Operations: Reduce manual work and eliminate duplicate data entry.
• Faster Collections and Less Delinquencies: Online bills and invoices are typically paid faster than mailed statements.  Also, providing more ways to pay (e.g. credit card) will reduce delinquencies.
• Cost Savings: Cut paper, postage, time managing delinquent accounts, and in-person processing costs.
• Better Compliance: Ensure secure payment handling.

Case Insight: We have found that cities that adopt online payment solutions often see a 25–40% increase in on-time collections within the first year while reducing administrative overhead.

Types of Digital Payments

Modernizing a city’s payment systems isn’t just about going online – it’s about giving residents and businesses flexibility in how they make payments.  Below are the most common and effective digital payment options cities are adopting today

1. Credit Card & ACH Payments (Most Common Option)

What It Is:
Residents and businesses make payments directly through the city’s online portal using credit cards, debit cards, or ACH (Automated Clearing House) bank transfers.

Why It Matters:

• Provides the fastest and most widely adopted payment method
• Supports recurring payments, auto-pay, and flexible schedules
• Reduces in-person transactions and staff workload

Benefit for Municipalities:
Enables real-time payment processing, improves cash flow, and reduces the administrative cost of handling checks or cash.

2. Bank Bill Pay

What It Is:
Residents set up payments through their personal bank’s online bill pay platform. The bank either sends funds electronically or issues a physical check on behalf of the resident.

Why It Matters:

• Offers a familiar experience for residents who already manage bills through their bank
• Increases on-time payments due to scheduling capabilities

Benefit for Municipalities:
Payments are automatically sent and applied, reducing late fees and manual processing.

3. Check Scanning (Remote Deposit Capture)

What It Is:
Even in a digital-first environment, many residents still prefer paying by check. Remote deposit capture lets municipalities scan paper checks and process them electronically without visiting the bank.

Why It Matters:

• Speeds up check processing
• Reduces manual handling and deposit trips
• Ensures quicker posting of payments to accounts

Benefit for Municipalities:
Improves operational efficiency while still supporting residents who prefer traditional payment methods.

4. QR Codes

What It Is:
Residents scan a QR code from their bill, email, or posted signage, which takes them directly to the city’s secure payment portal.

Why It Matters:

• Offers a fast, mobile-friendly payment experience
• Eliminates the need to manually type URLs or logins
• Can be used on bills, utility statements, permits, or business license invoices

Benefit for Municipalities:
Encourages quick, on-the-go payments, which can significantly improve collection times.

5. Digital Wallets (Apple Pay)

What It Is:
Allows residents to pay with a saved payment method on their smartphone or other device using a secure, tokenized transaction.

Why It Matters:

• Meets the expectations of mobile-first residents
• Offers speed, security, and convenience
• Reduces friction during checkout by eliminating manual data entry

Benefit for Municipalities:
Encourages higher adoption rates for online payments and aligns city services with the modern payment habits of residents.

Features to Look for in a Digital Payments Platform

When selecting a solution for your city, prioritize tools that create a seamless resident experience while improving back-office efficiency:

• Unified resident portal for utilities, permits, licenses, and property taxes
• Mobile-friendly payment options for today’s on-the-go residents
• Recurring billing & auto-pay for consistent revenue collection
• Secure transactions with PCI DSS 4.0 compliance built in
• Real-time reporting for finance and departmental staff
• Automated notifications via email or SMS for due dates, approvals, and receipts
• Integrated workflows that connect with your city’s ERP or financial software

Conclusion

Digitizing city payments is no longer optional — it’s an essential step in modernizing municipal services, improving financial performance, and meeting citizen expectations.

With the right platform, your city can:

• Reduce administrative overhead
• Improve compliance and security
• Offer residents simple, fast, and secure payment options
• Build trust and increase community engagement

Modern, digital payments strengthen the relationship between residents and their local government while empowering cities to deliver better, smarter services.