Growing economies and serving citizens

"Governments are unique in many ways. They have big, complex objectives that affect whole economies, citizens and businesses," says Rajiv Garodia, head of Visa's recently-formed Government Solutions unit.

"As people and businesses increasingly adopt and rely on digital tools and interaction, digitalisation is no longer an optional extra for the public sector—it is now a real and urgent imperative. Digital payments play a key role in almost every interaction of the public sector with citizens and businesses—and give governments a host of valuable opportunities to deliver lasting value.”

One area in which this has particularly been the case in recent years is public disbursement. As the Covid pandemic struck, governments faced the challenge of extending financial support to their citizens - suddenly, and on a massive scale.

By March 2021, indeed, governments worldwide had announced emergency funding totalling more than $13.8 trillion - more than four times as much as the amount of state support provided during the global financial crisis of 2008. Digital payments not only made that disbursement process far more efficient, but also significantly improved the experience for those receiving support. And as a result, governments have continued to apply the lessons learned after the pandemic receded.

In one example, in Spain, Visa has worked with the Spanish government and CaixaBank to digitise government food vouchers.

"The thing that pleased us the most about it was the change to the whole experience of the people who were receiving those benefits - taking away the stigma of using a voucher in a supermarket where everybody knows you are on benefits," says Garodia. "I feel very proud of that."

Of course, many of a government's financial activities are very similar to those of any other organisation – collecting payments, for example, where digital payments make it far easier for citizens to pay fines or fees for services. For example in urban mobility, where citizens pay to access a city’s bike hire scheme, automating a congestion zone charge, or tapping to take the bus or train.

Procurement, too, is in most ways a similar process for both governments and the private sector. However, governments may have extra issues to consider, such as a desire to support the economy by prioritising small businesses (SMBs).
"Governments want to have more and more small businesses winning government contracts," says Garodia.

"But they're not always set up for that - so how do you enable that, how do you make sure that the public spending of government employees and travel and procurement are clean and transparent, and also pay suppliers on time? I think we can help with that a lot, and help governments become more efficient and transparent."

In India, for example, the government e-Marketplace (GeM) has made it easier for SMBs to access the country's $500 billion annual public procurement budget, bringing price savings of around ten per cent. It has also slashed delivery times, reduced payment cycles and cut the number of late payments to vendors.

Such improvements to payment infrastructure not only allow SMBs to compete more effectively for government contracts, but help them to win other business too.

"Initiatives like Cashless Poland, where the Polish government worked with the payments industry to increase point-of-sale adoption and reduce cash payments, saw 49% of the SMBs that participated report a positive impact on their overall revenue after installing a point-of-sale device," says Garodia.

In fact, the widespread use of digital payments brings a virtuous circle into play. The more payments are digitised, the more data is available to governments to help them improve their programmes and services even more.

Several, for example, are using payments data to gain insight into their tourism industries, particularly important in the post-pandemic world. Digital payments data can reveal trends about where tourists are coming from, where they go, what they do and what they buy.

Similarly, says Garodia, "We have worked with some cities to help them understand their economies better - where people live and spend and move, how they consume and how cities can plan these things better to grow local economies."

And, he adds, "We do have some engagements right now where we are beginning to work with governments to solve some of those big macro insights about how their economies are working and how their programmes are working."

While Visa has been working with governments for decades now, the newly-formed Visa Government Solutions brings dedicated, specialised sales and solutions teams aimed exclusively at helping governments capitalise on the opportunities arising from digitisation.

"Governments are under pressure in driving cost-efficiencies and getting more bang for their buck, and digitisation of payments can help a lot with that efficiency," says Garodia.

"More importantly, though, digital payments can help achieve vital policy objectives and create higher prosperity for people who are left behind, as well as for small businesses."