Innovative Partnership to Accelerate Digital Services with Payments

Negotiations between the City and PayIt LLC took place between February and April 2021. City staff ensured that negotiations addressed concerns raised by City Council previously, such as rent-seeking, data storage and security, and technology lock-in. With the negotiation stage now complete, this report is requesting that Council approve the award of the contract to PayIt Digital Government Inc. ("PayIt"), a Canadian entity. This report provides more details on value to residents and the City, as well as the scope of work, phasing, term of contract and ability to terminate, risk management, and financial impact of the recommended commercial relationship. Together, PayIt and the City of Toronto will design services under a single City of Toronto branded digital experience and platform ("Platform"), beginning with the launch of property tax, utility bill, and parking violation payments in summer 2021. Further services, such as building permits, licenses, and court fines, will be integrated onto the same Platform in subsequent phases. The Platform will not only provide residents with greater digital payment options, it will offer self-service features that people expect from modern mobile and web applications in a digital era. From personalized bill reminders to scheduling payments, to storing account documents and saving preferred payment methods through one digital wallet, the Platform will make the experience of accessing City services and paying bills much simpler. While the City has demonstrated incredible resilience in standing up contactless services in response to the COVID-19 pandemic, the customer experience remains fragmented. A typical Toronto family might have numerous payments and touchpoints with the City annually, from paying their property taxes to their utility bills, to applying for a building permit for a porch, to street parking permits or a pet license. Yet, in order to successfully complete what could be 20+ transactions, they must access a minimum of 11 different touch points across the City. Oftentimes, customers access the service and the payment process separately, with available payment options differing widely across divisions and services. Residents, businesses, and visitors to Toronto want a simple, consistent, and connected experience with the City. PayIt enables these experiences by offering all types of payments through a personalized digital experience for citizens. PayIt LLC provides cloud-based and mobile-first technologies to government in 16+ states across the United States, with a growing list of government partners, including Memphis, Tennessee, State of North Carolina, and Kansas City, Kansas. PayIt LLC serves over 80 million citizens annually. Its Canadian subsidiary is headquartered in Toronto, Ontario. The agreement with PayIt also presents significant benefits for the City. City staff conservatively estimate that the City will realize a Return on Investment (ROI) of approximately $11 million over a 5 year agreement, net of fees paid to PayIt. This positive ROI can be reinvested in other City priorities. Estimated savings come from a reduction in office visits, mail outs, credit card service fees to the current payment provider, revenue processing and reconciliation, and a rationalization of technology. This relationship moves the City away from traditional approaches to technology builds where the City bears the risk, and shifts it to a cloud-based Software-as-a-Service ("SaaS") model where the supplier bears the risk of investment, as well as accountability for sustainment, ongoing innovation, and adherence to Canadian data requirements and the City's privacy and security standards. The City also benefits with certainty of time to market and a compensation model where fees to PayIt are tied to outcomes and customer adoption. Overall, fees to PayIt are estimated to be 0.49% of total City revenue collected. PayIt is paid on a per transaction basis only when a customer makes a payment to the City via the Platform. PayIt will be responsible for the deployment, hosting, configuration, integration, testing, management, training, and ongoing support of the Platform for City services. PayIt will also assume capital investment for development and integration of the platform, and will cover costs of technical and customer support services. The City has also negotiated revenue generation opportunities where it will be rewarded for generating value for customers and PayIt in terms of business development. The agreement with PayIt is flexible and includes provisions to reduce the likelihood of 'supplier lock-in'. The initial term of the agreement is for 3 years, with two additional one-year extensions entirely at the City's discretion to grant, for a potential total term of 5 years. The City will (prior to the end of the initial 3-year term) evaluate the relationship against key performance measures in order to determine if it is appropriate to grant the first extension. PayIt is required to adhere to the privacy, information, and data security policies set by the City.

2. City Council amend City of Toronto Municipal Code Chapter 441, Fees and Charges, and any other relevant Code Chapter(s), to delete the current acceptable payment methods of fees and charges, and delegate authority to the Chief Financial Officer and Treasurer to establish polices and guidelines regarding payment methods for fees and charges to be accepted by the City, including accepted payment methods under the recommended agreement with PayIt Digital Government Inc., and ensuring such policies always include a free payment method option for customers. 3. City Council authorize user fees for online card payments processed pursuant to the recommended agreement with PayIt Digital Government Inc. at the lesser of (i) 2.35% of the payment amount for online credit card transactions and 1.5% of the payment amount for online debit card transactions, and (ii) the amount permitted to be charged to users by the card brand rules, commencing with online card payments for property taxes, utilities and parking fines as may be permitted by the card brand rules, and authorize the necessary amendments to City of Toronto Municipal Code, Chapter 441, Fees and Charges and any other necessary Municipal Code Chapters as may be required.