Government Agencies Embrace Digital Payments, Boosting satisfaction

Updated June‍ 03, 2025

Federal agencies are increasingly turning to digital ⁢payments, a move that’s improving customer satisfaction and streamlining operations. A recent Government Accountability Office (GAO) report highlights the benefits and costs associated with this shift toward ⁤accepting credit, debit, and prepaid cards.

In March, President ⁣Donald Trump signed an executive order pushing federal agencies to ‍move away from paper checks. The mandate aims to⁤ transition government disbursements, payments, and supply chain transactions to methods like direct deposit, cards, and electronic fund transfers.

The GAO report, examining data from 2023, reveals that over 85 federal entities collected more than $43 billion ⁤through approximately 743 million card transactions. This widespread adoption of digital payments reflects a significant change in how the government interacts with citizens and⁢ businesses.

The report ⁣emphasized that agencies accepting card payments reported higher customer satisfaction.Additionally, the use of cards for employee purchases has led to lower administrative costs and better fraud prevention. The GSA SmartPay program, which provides payment cards, generated $488 million in ⁢refunds in fiscal year 2023 based on $37 billion in net eligible funds spent.

While embracing digital payments offers numerous advantages, it also comes with costs. The ⁤GAO report noted that federal entities paid about $784 million in fees to card issuers, ⁤networks, and facilitators in 2023, averaging $1.06 per transaction. These fees represented 1.8% of the revenue collected through card payments, aligning with industry estimates for‍ U.S.merchants.

Some agencies have ‍already taken ‍steps to minimize these costs. Five of the entities surveyed by ⁢the GAO‍ reported reducing fees by meeting transaction volume thresholds, limiting the types of cards ‍accepted,⁣ or capping transaction amounts.

The Treasury Department accounted for $18.6 billion of the $43 billion in card payments. The GAO noted that accepting cards reduces the administrative burden of handling cash and checks.

For some agencies, the shift to digital payments is nearly complete. Two agencies reported that 90% or ⁢more of their sales come from credit or debit cards. Amtrak officials also indicated that cards account for over 90% of ticket sales revenue, with online card acceptance further enhancing customer convenience.

What’s next

The move toward digital disbursements, including payments made directly to debit cards and bank accounts, promises to⁤ further improve the payment experience for ⁣both government agencies and individuals. As digital payment options expand, the government aims to reduce fraud and increase satisfaction with⁣ payment processes.