Are debit cards key to e-gov?
- By Nicholas Morehead
- Apr 26, 2001
Citing credit cards and convenience fees as a barrier to the growth of e-government,
Massachusetts' chief information officer supports debit cards as an alternative.
CIO David Lewis cited third-party transaction fees, often as high as
3 percent, as a main culprit for why just 5 percent of a total of 307 transactions
are online in Massachusetts.
"What's holding us back? Simple: money," Lewis said. "But it's not the
enabling that's expensive, it's the credit cards. Credit card payments drive
up the cost of business."
Lewis spoke Monday at National Automated Clearing House Association's
Payments 2001 conference in Washington, D.C.
"My job is to put more electronic transactions online, but I don't like
it that we have to take 1.7 [percent or] 2 percent of the revenue and give
it back," Lewis said. In Massachusetts, $18 million was passed on to the
Department of Revenue to pay transaction fees.
A Massachusetts survey found that 43 states accept some form of credit
card payments. That accounted for about 19 million transactions totaling
$1.9 billion last year. And that, Lewis, says, was with four states not
responding to the survey.
Some governments allow a third party to charge a convenience fee for
the transactions. But Lewis, quoting from a recent Forrester Research Inc.
report, said, "citizen convenience fees are not long for this world."
"It sounds rather counterintuitive," Lewis said. "It should cost less
if not the same to do these things online, so why the hell are you charging
me this extra money to do this?"
Instead, Lewis supports the debit card model, with transaction fees
usually as low as 25 cents. He estimates it could cut his state's costs
by 87 percent.
Debit card critics say the technology isn't mature and has security
flaws, but Lewis said, "I'm sure we can figure out the security."
"Everyone knows this is not a technology issue, but rather, government
isn't completely "Webified' because it can't afford to pay the bills," Lewis