Official Payments Rolls out E-Checks for Government Transactions

Official Payments Corp., a Stamford, Conn.-based processor that specializes in payments to government entities, has announced it is now processing electronic checks on the Internet, with settlement through the automated clearing house. The company, which quietly began the service in December and is now trafficking e-checks for 34 government agencies, refuses to disclose either transaction volume or the so-called convenience fee consumers pay Official Payments to make e-check payments. The new service opens a transaction channel and with it the potential for more volume, the company says. “Clients have been asking for it,” says Matt Brusch, director of communications for Tier Technologies Inc., parent company for Official Payments. “This allows government agencies to provide that option, and obviously we're interested in growing the business.” Consumers already use the Official Payments Web site to pay fees, fines, taxes, and other obligations to federal, state, and local governments via credit and debit cards. The company serves a total base of more than 1,500 government entities for credit and debit card acceptance, including the Internal Revenue Service, 22 states, the District of Columbia, and local agencies. For card payments, Official Payments stands in as the merchant and charges consumers a percentage-based fee to recoup interchange and other costs. For federal payments, including those to the IRS, the fee is 2.49%. For e-check payments, Brusch says, the fee is a flat charge rather than a percentage, though he will not disclose it other than to say it varies widely depending on a number of factors. The fee for card payments to state and local entities also varies markedly, depending on location. A property tax payment to Fresno County in California, for example, carries a 2.5% fee. For the same type of payment to McHenry County in Illinois, however, Official Payments charges 7%. Official Payments began handling government payments over the phone in 1996 in California, and has been processing card payments to the IRS for five years. The company started taking payments on its Web site in 1999, and says it has processed 6 million total payments since then amounting to more than $5 billion.