Why Digital Payments Matter for Taxpayers and Tax Administrators Alike
February 8, 2022
Paying taxes is right up there with going to the dentist and unloading the dishwasher. Nobody likes doing any of those things, but we’ve got to do them. Paying taxes is among the most challenging and time-consuming interactions citizens have with their government. While dentists may struggle to make root canals a breeze, tax administrators can make paying taxes easier on citizens. By implementing digital solutions that align with taxpayers' needs, they create frictionless payment experiences that help facilitate the compliance of tax obligations.
Citizen Payment Experiences Have Stalled at Fair to Good
Citizen payment experiences have been gridlocked in the fair-good range for the past two years, offering plenty of opportunities for government agencies concerned with citizen satisfaction to make improvements. Between 2019 and 2021, KUBRA research recorded a modest drop in satisfaction regarding payment experiences. 39% of respondents considered their customer experience as good in 2021 compared to 41% in 2019. And, 40% rated their current payment experience fair in 2021 compared to 38% in 2019. Government agencies’ failure to adapt to changing consumer preferences has undoubtedly contributed to stagnating citizen satisfaction.
Taxpayers Have a Clear Preference for Digital Payments
The number of citizens using digital payment methods to pay their taxes increased to 53% in 2021 from 46% in 2019. An additional 25% of citizens said they would use digital payment methods to pay taxes if available. 50% of citizens said that digital payments would help them pay on time–music to tax collectors’ ears! The pandemic further entrenched the popularity of digital payments as consumers sought convenient, contactless payment methods. Since the onset of the pandemic, 37.5% of citizens said their payment preferences have changed. Time will tell if the shift in consumer behavior triggered by COVID-19 is here to stay, though many predict there’s no turning back now.
The top three reasons citizens pay for their government services online are:
- 70% think it's convenient
- 62% believe that paying online is easier
- 58% think it saves them time
In addition to wanting digital payment options, citizens also have growing expectations around payment processing. 27% expect payments to be processed instantly, 32% expect the same day, 15% expect the next day, and 17% expect it to be processed in 2-3 days. When you add it up, 91% of respondents expect their government services payment to be processed within three days or less.
Approach Digital Payments From the Taxpayer's Point of View
Learning as much as possible about citizens allows you to gain an in-depth understanding of who they are, what they want to achieve, how they want to engage, and how they want to pay their bills. The majority of citizens today are on the go and relatively comfortable with digital payment technology, whether through mobile apps, email, or websites. When paying for government services, 59% of citizens prefer to use the government website, 46% prefer mobile apps, 35% bank website, 24% mail, 17% telephone, and 13% government walk-in center. This list proves it’s no longer possible to meet citizen expectations with one or two traditional payment methods. By adopting an omnichannel payment solution, you can better meet the needs of all your taxpayers.
Offering Digital Payments Benefits Tax Administrators
For those who aren’t sure if an investment in digital solutions will pay off, here are some of the benefits of going digital for tax departments:
- Increased citizen satisfaction: 40% of citizens said that improving digital payments will improve their overall satisfaction with the government. By providing consistent information and standardized services, citizens are more likely to perceive the agency as honest and fair, making them more inclined to comply with tax regulations.
- Fewer administrative errors: Digital payment solutions result in fewer errors because data is automatically entered and calculated.
- Enhanced transparency and trust: Having electronic payment solutions increases transparency around the tax payment process and builds citizen trust in the system.
- Improved administrative efficiency: Streamlined processes and digital payment solutions contribute to a better citizen experience. Digitization reduces operations times, decreases operating costs, and improves audit efficiency.
- Increased tax compliance: Meeting customers on platforms they’re already using simplifies the payment process. 50% of citizens said that improving digital payments would help them pay on time.
Further, 33% of citizens feel that offering digital payments shows their government is innovative. 27% are more willing to engage with a government agency providing digital solutions. And, 23% said it increases their trust and confidence in their government.
Options Are Key to Citizen Satisfaction
Today’s citizens expect to pay their taxes as quickly as they do for other goods and services. Unfortunately, many tax departments just aren’t there yet. The lack of digital payment options forces many citizens to make payments through inconvenient channels that they don’t usually use. KUBRA EZ-PAY® offers taxpayers a wealth of on-demand payment options through digital, voice, or artificial intelligence (AI) channels such as online and mobile, automated IVR and call centers, and smart speakers and chats. Citizens can also pay for government services using different payment methods, including Apple Pay, Google Pay, and PayPal–great news considering the rise in popularity of digital wallets.
Source: KUBRA Citizen Billing and Payment Report 2021.