Overcoming the Top Challenges in Adopting E‑Payments

Resident expectations are changing. More people want a simpler, more unified way to manage municipal bills.

The “Amazon effect.” It’s reset the bar for everyday transactions. With a few taps, people can track a package, change an order, or pay for a streaming service in seconds. Utility bills are no longer exempt from that expectation.

Residents increasingly expect paying for water service or managing a utility account to come with the same simplicity, transparency, and speed they experience on platforms like Amazon.

Non-Cash Payment Normalcy: Consumer Behavior Has Already Shifted

That expectation is forming alongside a broader shift in payment behavior. In 2024, U.S. consumers made an average of 48 payments per month, led by credit cards at 35%, debit cards at 30%, and cash at just 14%.

Federal Reserve data also show that most consumer payments are now noncash, including credit cards, debit cards, ACH transfers, checks, and other electronic payment methods. The International City/County Management Association (ICMA) projected that nearly 43% of payments in the U.S. and Canada would be cashless in the mid-2020s.

Many local governments are still working to modernize electronic payment systems even as residents expect faster, easier online transactions. As that shift continues, local governments face growing pressure to offer payment options that are secure, convenient, and easy to use.

The Four Common Barriers to E-Payment Adoption

In practice, the case for e-payments may be clear as demand grows, but adoption often stalls in predictable ways. For many local governments, the barriers tend to fall into four familiar categories:

1. Budget constraints and transition costs
2. Staffing shortages and limited internal capacity
3. The digital divide affecting resident access
4. Cybersecurity and compliance concerns

Looking closely at those barriers helps explain why many governments still rely on paper-heavy or partly manual payment processes. It also helps clarify what a more workable path forward looks like.

Barrier 1. Budget Constraints and Transition Costs

Budget is often the first obstacle in any modernization conversation. For local governments, especially those balancing competing operational needs, the upfront cost of changing billing and payment systems can feel hard to justify, particularly when the costs of staying with older processes are spread across daily operations instead of showing up in one clear line item.

The Cost of Staying Put Adds Up

In many cases, it is more expensive to maintain outdated systems than to modernize them.

State and local governments already spend heavily on technology. One 2025 estimate placed total state and local government IT spending at over $153 billion annually, with about half of that spending at the city and county level. A significant portion of that investment is still tied up in maintaining legacy systems rather than improving efficiency or service delivery.

Over time, that spending pattern creates a higher total cost of ownership, as agencies continue funding systems that require ongoing maintenance without delivering meaningful gains in performance or usability.

That pressure shows up clearly in the 2025 EY State and Local Government Tech Modernization Survey. Among surveyed state and local IT leaders, 56% said reducing costs was a top priority, 54% said improving cybersecurity was a top priority, and 47% identified legacy modernization as a leading focus.

Paper Processes Create Hidden Costs

For utility teams, older payment processes can keep generating costs that are easy to miss because they are spread across daily operations, including:

• Manual reconciliation
• Printing and mailing paper bills
• Follow-up on lost checks
• Processing returned mail
• Handling payment disputes and fee complaints

Paper-based systems also carry direct infrastructure costs. The White House’s 2025 executive order on modernizing payments pointed to more than $657 million in fiscal year 2024 costs tied to maintaining the physical infrastructure needed to process paper-based payments and records.

The Government Finance Officers Association (GFOA) has made a similar case in its guidance on government payments, noting that paper checks are costly, require more handling and processing time, are harder to track, and introduce additional fraud risk.

A Common Scenario: Convenience Fees Can Undercut Adoption

Then there is the fee question. Credit card processing fees and convenience fees are a persistent headache for municipalities because they are both operational and political.

Residents may appreciate digital payment options, but that goodwill fades quickly when paying online feels like paying extra for what’s now an expected digital service.

Richmond, Virginia, offers a clear example. Residents there paid more than $1 million in convenience fees for online utility bill payments in fiscal year 2024 alone. In response, the city eliminated the $2.25 transaction fee for those payments in 2025.

Barrier 2. Staffing Shortages and Limited Internal Capacity

Even when funding is available, many communities run into a second problem quickly. They do not have enough staff capacity to implement and support the change.

Staffing Is a Leading Barrier to Adoption

Research on U.S. municipalities with populations under 100,000 found that 55% identified lack of staff as the most common barrier to e-government adoption. The same study found that IT staffing was the strongest predictor of adoption, with high-adopting municipalities averaging 2.0 full-time IT employees compared with 0.87 among low adopters.

This helps explain why some worthwhile modernization efforts stall. The work can feel more complex when setup, migration, testing, staff support, and resident communication are all happening within older, disconnected systems.

Small Teams Often Carry a Bigger Burden

In larger organizations, that work may be distributed across multiple teams. However, in smaller jurisdictions, that work often falls to one person or to staff members whose primary role is something else, and the challenge to modernize can be especially sharp in these smaller communities.

Of approximately 19,500 incorporated cities and towns in the United States, about 75% have fewer than 5,000 residents, and only about 4% have 50,000 or more, even though those larger cities account for roughly 39% of the U.S. population.

Reporting on small‑town technology capacity has also found that many of these local governments have no dedicated IT department at all, or only minimal IT staff.

Manual Work Consumes Limited Capacity

This is where manual payment work becomes a bigger operational problem than it first appears. When billing and payment work falls to already stretched-thin staff, common time drains can include:

• Updating billing cycles
• Posting payments manually
• Mailing reminders
• Reconciling records across systems
• Handling account exceptions one by one

Workforce Readiness Still Matters

Workforce readiness matters too.

EY found that 38% of surveyed government IT leaders cited a lack of skilled employees as a barrier to using private-sector innovation effectively. Route Fifty has also described digital transformation in government as a people challenge as much as a technology challenge, since staff adoption, service design, and process improvement all shape whether modernization efforts succeed.

For small teams looking to adopt e‑payments, the core question is practical: Can they add another system with enough integration, automation, intuitive self‑service workflows, and ongoing staff support to make daily work easier instead of harder? When digital payment tools reduce manual steps, fit into existing processes, and come with training and change‑management support, modernization is far more likely to stick on both the staff and resident side.

Barrier 3. The Digital Divide Affecting Resident Access

A payment system can be efficient for staff and still fall short for residents if it assumes every household has the same level of digital access. That is one of the clearest reasons e-payments need to be treated as an expansion of service options, not a replacement for every traditional channel.

Many residents want to pay online and expect to do it quickly from a phone or laptop, while others prefer paper bills and in-person service; limited internet access, technical barriers, device limitation, and familiarity of routine may affect these preferences.

A workable public-sector payment strategy has to account for both groups.

Digital Access Is Still Uneven

The access gap remains significant. Pew Research Center reported in January 2026 that 54% of adults in households earning less than $30,000 a year subscribe to home broadband, compared with 94% of adults in the highest-income households.

Mobile Experience Matters

The same Pew analysis found that roughly one-third of lower-income Americans are smartphone-dependent for internet access, and that Black and Hispanic adults are less likely than White or Asian adults to subscribe to broadband.

That changes what a usable payment experience looks like. If a portal is difficult to navigate on mobile, requires too many steps, or performs poorly on lower-bandwidth connections, the friction lands hardest on residents with the fewest alternatives.

Affordability and Age Also Shape Access

Affordability remains a major factor, too. Further Pew analysis of all 52 digital equity plans (including Washington, D.C.’s and Puerto Rico’s) found that every state identified affordable broadband access as the leading barrier to digital equity.

Older adults can face additional hurdles around confidence, clarity, device use, and privacy concerns. A 2026 analysis found that adults 65 and older were the least likely age group to own smartphones or subscribe to broadband, with about 70% reporting home broadband access.

Addressing the Access Divide Effectively: What This Means for Local Governments

For municipalities, the next steps are straightforward:

• Residents who want a digital option should have one that is secure and easy to use
• Residents who rely on traditional methods should continue to have accessible ways to pay
• Mobile usability matters because many households are managing access through phones, not desktops

Barrier 4. Cybersecurity and Compliance Fears

Payments involve sensitive financial information, which means digital payment adoption always brings security questions with it. When it comes to local governments, that concern is well-founded.

Security Risks Are Real

ICMA data estimates that data breaches have cost local, state, and federal governments $26 billion over the past decade, often involving personally identifiable information, Social Security numbers, and other highly sensitive data. For any agency considering expanded online payments, those risks are hard to ignore.

Ransomware is another major concern. The 2024 State of Ransomware in State and Local Government report from Sophos found that 51% of local governments experienced ransomware in the past year. At the same time, the Center for Internet Security’s 2023 Nationwide Cybersecurity Review reported that about 70% of state, local, tribal, and territorial organizations cited lack of sufficient funding as a top cybersecurity challenge and that roughly 80% had fewer than five dedicated security employees.

Together, these numbers tell a blunt story: Threats are rising while confidence in funding and preparedness remains low, which makes secure payment processing even more important.

The Compliance Layer

Compliance requirements add another layer. Any government accepting card payments has to account for the Payment Card Industry Data Security Standard, or PCI DSS.

In larger organizations with dedicated security and compliance staff, that work is demanding but manageable. For smaller communities with limited IT resources, it can feel complicated fast. Teams may hesitate to expand digital payment options because they are unsure how much of the compliance burden they can realistically absorb.

That hesitation is understandable, but it should not be confused with a reason to avoid progress altogether. It is a reason to be careful about how digital payments are implemented.

Platform Choice Matters

Modern payment platforms can reduce the amount of security and compliance work handled directly by internal teams by placing payment processing in a more structured environment.

Local governments still need governance, oversight, and strong vendor review. It does, however, reduce the likelihood that small internal teams will be left trying to manage every technical detail themselves.

How Utility Billing Helps Cities Move Past These Barriers

Once those barriers are clear, it becomes easier to see how a better approach can be achieved.

A Modern Platform Should Solve More Than One Problem

Beyond accepting online payments, a modern utility billing platform should help reduce manual work, support small teams, account for security demands, and give residents a smoother way to manage bills.

CivicPlus Utility Billing is designed around those day-to-day needs. It includes digital payments natively powered by CivicPlus Pay, along with support for other payment providers. The platform supports a broader billing workflow so teams can spend less time handling paper, re-entering data, and managing disconnected processes.

It Can Support the Four Main Barriers

That can help communities in several ways:

For Budget Pressure
Automation can reduce paper-based workflows, improve payment collection, and cut back on administrative tasks that build up over time.

For Staffing Strain
Centralized account management and automated billing tasks can reduce repetitive back-office work.

For Resident Access
Mobile-friendly portals and multiple payment options can give residents more flexibility in how they pay.

For Security Concerns
Structured, cloud-based payment environments can reduce the technical burden on internal teams.

Real-World Figures: Cost Pressures and How Modern E-Pay Can Help

Case Study: $7.7M Delinquent Revenue Recovered

In one CivicPlus case study, a Utility Billing implementation helped recover $7.7 million in delinquent utility revenue in two billing cycles, cut returned mail by 90%, and increased online payments by 39%.

Explore Utility Billing

Ready to reduce paper-heavy processes and give residents an easier way to pay? Explore CivicPlus Utility Billing to see how a modern billing platform can support staff efficiency, payment visibility, and resident convenience.

Request a CivicPlus Utility Billing Demo Today

E‑Payment FAQs for Local Governments

What is e‑payment and how does it work for making online payments?

E‑payment (sometimes written as e‑pay or epay) is an electronic payment method that lets residents pay bills online instead of using cash or paper checks. An electronic payment system connects your utility billing software to secure payment rails so residents can authorize a transfer from a bank account, card, or digital wallet, and funds move electronically while sensitive data is protected under modern security standards.

What types of payments can I make through e‑pay solutions?

Most e‑pay solutions support a range of payment methods for utility bills and other municipal services, including credit and debit cards, ACH transfers from a bank account, and digital wallets such as those tied to mobile devices. Depending on your provider, residents can schedule one‑time online transactions, set up recurring digital payments, or pay ahead to keep their account in good standing.

How long do e‑payments take to post to a utility account?

In many systems, e‑payments post to the customer’s utility billing account in near real time, even if settlement on the banking side completes in one to three business days. That means staff see the payment in the electronic payment system quickly, reducing exceptions and improving the overall customer experience.

How do e‑payment tools protect sensitive information?

Modern e‑payment platforms are designed to protect sensitive data such as card numbers and bank account details through encryption, tokenization, and compliance with industry security standards like PCI DSS. By routing digital payments through a secure electronic payment system, local governments can reduce direct handling of sensitive information while still giving residents convenient online payment options.

Which industries commonly use e‑pay systems for their payment processing?

E‑pay systems are widely used in utilities, local government, healthcare, higher education, and other service-driven industries that manage recurring bills. In each case, digital payments help reduce manual processing, shorten payment cycles, and create a more consistent customer experience across online transactions and traditional payment channels.

How do CivicPlus Utility Billing and e‑payments work together?

CivicPlus Utility Billing manages the full lifecycle of a utility account (meter data, charges, statements, and payment posting), and lets residents pay those bills online with cards, ACH, or other digital payment methods.

Payments made through the self-service resident portal post back to Utility Billing automatically, reducing manual reconciliation, improving cash flow, and giving residents a consistent online payment experience across devices.