Mastercard fully supports the European Commission’s eGovernment Action Plan. We would, however, encourage considering and promoting the benefits of electronic payments to enhance digital interaction between government and its citizens.
Based on the Mastercard’s experience in implementing the eGovernment solutions and working closely with the local/national governments, there are examples we would like to share with the Commission. Those include case studies (below) as well as areas that should be looked at in order to deliver comprehensive eGovernment systems across the continent.
Digitalisation of Payments: Currently, the majority of payments made to or by (inter-) national public entities relies on non-electronic solutions, such as cash or checks. This high usage of non-electronic payments generates significantly higher operating costs, lower control and transparency, slower payment, and carries a high risk of fraud. Government electronic payments can stimulate the uptake of digital transactions and also deliver data enabling greater control, monitoring and prediction capabilities.
The digitalisation of payment flows can significantly improve eGovernment services, especially in the following areas:
1) e-Welfare disbursement, e.g., pensions and social aids. These drive financial inclusion, reduce fraud, support digital identity and reduce costs for governments. E-welfare solutions also reduce the amount of cash transfer payments and thus reduce the shadow economy.
2) e-Procurement and market place solutions, i.e., goods and services purchased by public entities. This drives significant cost savings, increases SME inclusion, improves SME cash flow as well as auditing and transparency.
3) e-Collections, i.e., collecting funds from citizens and corporations (taxes, VAT, fines, school fees, street parking). These tools increase overall tax collection and reduce the shadow economy.
Digital and financial inclusion: Digitalisation of payments plays an important role in creating a digital society, one of the prime objectives of the European Union. It allows people to access online commerce including online discounts and better deals. By digitalising disbursements (pensions, wages, etc.) the government encourages the use of electronic payments, and discourages the use of cash. If people get paid electronically they are more likely to spend their money via electronic means (including online), instead of withdrawing cash.
Mastercard endorses the Commission “inclusive by default” approach to ensure the most vulnerable groups in society are not left behind even further. A large danger is assuming that the most sophisticated solutions will automatically benefit all citizens. Successful eGovernment strategies need to be tailored towards the digitally and financially excluded.
Security: Digital solutions for eGovernment provide enhanced security and the ability to deliver solutions at pace with additional functionality at the relevant time. This approach drives enhanced monitoring and control through improved control of money flows, increased transparency and auditing of key stakeholders.
Interoperability: An interoperable approach enables providers like Mastercard to propose and develop e-payment solutions in many areas which are consistent globally and efficient locally. The programmes may be developed centrally or regionally and Mastercard is willing to leverage its global experience in order to advise, build, deliver and educate on the appropriate solution. Some examples include multi-country social disbursement cards, e.g., in the UK, France, and Italy, or contactless technology supporting open loop transportation programmes, e.g., in London, Moscow, Kiev, and Madrid.
Please note that the list is not exhaustive and Mastercard will be glad to elaborate on any examples provided below and/or share non-EU projects, should that be of interest.
- Transformational Tax Collection initiative in Italy
Millions of Italians can now pay their tax and utility bills faster and more easily, thanks to the acceptance of electronic payments at nearly 70,000 new locations and more than 100,000 points of sale nationwide, including the government owned postal service Poste Italiane, the national network of tobacconists, a wide range of bars, cafeterias and newspaper kiosks and some large supermarkets chains. The result has been more efficient tax and bill collection process for the government, and faster, more convenient payment for millions of Italian residents.
Government tax and services and bill payments are estimated €600B per year in Italy (source MC Advisors analysis). Payment instruments accepted were limited to cash, local scheme debit card or Poste Italiane cards, with offices equipped with old generation POS terminals only.
In 2012 the Italian Government developed 3 main objectives for its payment collection: enlarge acceptance network, improve customer’s experience and facilitate tax collection by promoting electronic payments.
By coordinating the efforts of multiple players of the ecosystem, Mastercard contributed to create the appropriate conditions to achieve this payment transformation:
- Partnering with large national networks: Poste Italiane, Italian Tobacconist Network (ITB), Lottomatica and Sisal (1st and 2nd world’s largest operators of Lotteries representing 110,000 tobacco shops, cafeterias and newspaper kiosks in Italy)
- Partnering with Treasury banks and Tax Collector agencies (Equitalia) to equip Public Admnistration offices in cities and villages with POS terminals, as well as online payments
- Mid 2013, 15,000 tobacco shops of Lottomatica were the first to introduce tax payments.
- 1st payment was made at Poste Italiane in early 2014, roll out of 80,000 POS terminals completed in December 2014, with also 3000 postmen equipped with mPOS allowing payments in the home of all Italian residents and SMEs.
- 10,000 Public Administration offices equipped so far.
- Tobacco shops of Sisal and ITB networks enabled in 2014.
- All totaled, approximately 75.000 locations and 110,000 POS terminals have been deployed, many contactless.
- The 2 million Italians who used to make bill payments at Poste offices can now pay in a simple, safe and smart way.
- Transport for London transforms the Oyster system
Transport for London launched the new contactless payments service on London’s Tube, tram, DLR, London Overground and most National Rail services in London, as well as on buses on September 16th 2014. Mastercard worked with Transport for London and its technology provider Cubic Transportation Systems to add Mastercard contactless payment acceptance capability to the whole Oyster smartcard reader estate.
- 12 million journeys a day on London’s public transport.
- Purchasing tickets created unnecessary hassle for customers in an already very busy environment.
- Oyster was introduced 11 years ago to enable travellers to tap and go.
- Further innovation offered opportunities to make further improvements in time and efficiency.
- Transport for London collaborated with Mastercard and others in the payments industry to create a new Transit Transaction Model.
- Mastercard worked with Transport for London and its technology provider Cubic Transportation Systems to add Mastercard contactless payment acceptance capability to the whole Oyster smartcard reader estate.
- The partners ensured the Mastercard Transit Aggregation rules were compatible with the Oyster back-office system.
- Customers with a contactless Mastercard could now use them on the Oyster readers just like Oyster – enabling pay-as-you-go travel within London without any need to get an Oyster card.
- A seamless solution which reduces delay and inconvenience.
- Increased ridership on public transport
- Reduced Oyster card issuance, top-up commissions, cash-handling & staff costs
- Prepaid Cards Bring Efficiency to Social Services in the London Borough of Brent
The London Borough of Brent worked with Mastercard and Prepaid Financial Services to design and launch a social disbursement prepaid card programme. The programme disbursed local welfare payments efficiently , lowered fraud and gave citizens more secure and convenient services, with quicker access to their benefits.
- The Borough needed a streamlined way to disburse, track and reclaim funds for the local community.
- The existing method was costly and inefficient - cash, checks or direct deposit into bank accounts.
- Payments were handled manually, was expensive and time-consuming.
- Payments were processed late and impacted the ability to deliver front line care provision.
The award winning programme delivered immediate benefit to the Borough and their users by:
- Integrating the payments solution into the existing social care and finance systems.
- Eliminating a 6-months backlog of manual monitoring and freeing up valuable resources for front line care.
- Delivery of a 13 language service center to support a multi ethnic, low internet borough
- Providing improved programme management through alerts and triggers which reduced fraud and leakage
- Reclaim rates rose to 90-95% and surplus balances grew to £330k
- Significant process and admin savings for council.
- 12 additional programmes added post launch