The New South Wales (NSW) state government recently announced that it is progressing with its plans to improve its payment services through the development of a unified payment services platform (PSP). This shows how public sector bodies are focusing on improving their payments capabilities and enhancing the customer experience. For banks and payment providers, this means that there is a potentially very lucrative opportunity to deliver more efficient payment solutions to the public sector.
The public sector needs to focus on payments modernization
The new PSP will essentially act as a payment gateway to the state’s various fee-collecting agencies, providing a similar payment experience and, in theory, increasing the range of payment service options available. The operation of a single platform that ties in with each state department’s back-office functionality and subsequently their partner acquiring banks will, in theory, help to reduce costs by removing duplication in the state’s payment functions, while also making it easier to implement new payment options for consumers and end users. A single modern platform will be better able to cope with the variety of payment tools emerging, such as PayPal and, if it ever launches in Australia, Apple Pay. The move does not suggest that the state is backing Apple Pay over other tools, but it does mean that it will be well placed to introduce it in the future, if required.
Other countries have also been launching dedicated PSPs across their services in recent years, notably India with its PayGov India initiative. In a recent Ovum survey of payment-taking organizations globally (the Ovum Payments Industry Survey 2015), 58% of municipal and government agencies said that payments are a clear part of their business strategy. 75% of all organizations, including government and municipal bodies, agree that consumers want a broader choice of payment tools. The shift to more centralized government payment platforms is likely to become more common in the near term.
There is a large appetite for payments transformation in the public sector, and banks and payment providers of all types have the potential to gain a strong foothold in what has traditionally been a slow-moving niche market. Vendors and payment providers that can meet the specific needs of the private sector now are likely to gain traction as public sector development gathers pace.
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"Apple Pay takes a conservative approach to the mobile payments revolution," IT0003-000624 (September 2014)
Gilles Ubaghs, Senior Analyst, Financial Services Technology