Municipal ERP platforms handle billing for utilities, taxes, permits and fees, and their city and county clients expect residents to pay through every common channel. Modernizing that payment layer raises three practical questions: how to accept payments in person and online through one integration, how to let clients charge compliant convenience and service fees, and how to receive payments residents send from their own bank’s bill pay system.
Key Takeaways
- Government entities add a fee to card payments that Visa calls a service fee and other networks treat under their own terms and rules; under Visa rules, only certain merchant category codes (MCCs) can process service fees.
- When the fee is processed as a separate transaction, the municipality or utility receives the full bill amount and pays no processing fees, while the fee is charged to the cardholder on its own transaction.
- Residents who pay through their own bank’s online bill pay can have those payments delivered electronically to their service provider, instead of as mailed checks.
How can a municipal ERP offer omnichannel payments, in person and online?
Residents still pay utility bills, permit fees and program registrations at the counter, while many others expect to pay online at any hour. When those channels run through different providers, the billing office ends up reconciling separate deposits and reports for the same bill. An omnichannel approach runs every channel through one payments integration. Zift ([Zift branded URL]) supports EMV terminals for in-office payments alongside online card and ACH payments through the ERP’s resident portal. A utility payment taken at the counter and one made online post to the resident account and appear in reporting the same way.
Many municipalities also collect for several departments at one front desk. Zift can place multiple merchant accounts on a single terminal, so one device can process payments for utilities, parks and recreation, and building permits. Each department’s payments are deposited into its own bank account. The city avoids buying, managing and reconciling a separate terminal for every fund, and finance staff can still see each department’s activity separately. When evaluating providers, ask whether in-person and online payments share one integration and one reporting view, how many accounts a single terminal can support, and how deposits are kept separate by department or fund.
How can a municipal ERP let cities and counties charge convenience and service fees on card payments?
Terminology is the first source of confusion. Visa calls this fee a service fee; other networks use different terms and rules. GovTech platforms use both terms, so ERP vendors should support either label in resident-facing screens. Service fees are available to government, education and utility merchants to cover processing costs. Under Visa rules, only certain MCC codes can process service fees.
The fee can be added to the total in one transaction or processed as its own transaction.
| One transaction | Two transactions | |
|---|---|---|
| How the fee is charged | Added to the bill amount in a single charge | Charged to the cardholder as its own transaction |
| What the municipality receives | One combined deposit (bill plus fee), with processing costs typically netted from it | The full bill amount |
| Who pays processing fees | The municipality | The cardholder, through the separate fee transaction |
Zift processes the fee as a separate transaction so the municipality or utility receives the full deposit and does not pay fees. The ERP sends a convenience-fee request and gets back the fee amount, calculated from the fee tiers configured for that merchant in the merchant portal. It then sends one sale request with the combined amount, and Zift processes two transactions: one for the bill and one for the fee, which settles to a separate dedicated account. The ERP can also calculate the fee itself and skip the first call. Zift configures the two-transaction setup on the merchant account.
How can a municipal ERP accept and reconcile payments residents make through their bank’s bill pay?
Bank bill pay means the resident pays from their own bank’s online bill pay instead of the city’s portal. The resident adds the utility or tax office as a payee in online banking and schedules the payment there. Without an electronic connection, many banks fulfill these payments as mailed checks, which the billing office then opens, keys in and deposits by hand.
| Mailed check | Bill Pay Network | |
|---|---|---|
| How the resident pays | Bank bill pay; the bank prints and mails a check | Bank bill pay; the payment is routed to Zift and deposited electronically to the biller |
| How it reaches the ERP | Paper check opened by the biller’s staff | Routed electronically through the payments provider |
| How it reconciles with deposits | Matched by hand against deposit slips | Reported with other payment channels |
Zift processes Bank Bill Payments for billers that want to receive the payments electronically and not via check. Payments are routed through Zift and deposited alongside card and ACH payments, and the same integration provides reporting on all three.
Reconciliation depends on funding. With gross funding, the city receives the exact invoice amount, and a batch cut-off aligned to the client’s time zone makes deposits match invoices and daily reports.
Frequently asked questions
Is a service fee different from a convenience fee?
Visa uses the term service fee for its program, and other networks use different terms. Each network has its own rules, including which merchant categories are eligible, so platforms should configure fees against the specific network requirements that apply to their merchants.
Does the fee have to be processed as a separate transaction?
No. The fee can be added in one transaction where the capability exists. Processing it as a separate transaction lets the municipality receive the full bill amount and avoid processing fees, while the cardholder pays the fee on the fee transaction.
Which merchants can charge a service fee under Visa rules?
Only merchants with eligible merchant category codes can process service fees under Visa rules, generally government, education and utility merchants. Eligibility is set on the merchant account, so confirm the MCC with the provider before enabling fees.
How do bank bill payments reach a municipal ERP?
When a provider supports an electronic bill pay network, bank bill pay payments reach the ERP and the billers electronically instead of as mailed checks.
Can one terminal take payments for more than one department?
Yes, with a provider that supports multiple merchant accounts on one terminal. Payments for utilities, parks and recreation, or permits are deposited into each department’s own bank account.
Conclusion
Municipal ERP platforms can modernize payments without replacing the systems their clients rely on. Processing service and convenience fees as a separate transaction lets cities and counties receive the full bill amount. Bank bill pay replaces mailed checks with electronic payments that can be reported alongside card and ACH.
For GovTech platforms evaluating providers, Zift’s embedded payments for municipal ERPs are one option to consider. The key questions to ask any provider are how fees are configured per merchant, how deposits reconcile to daily activity, and how new payment channels are added on top of an existing integration.
