Council approves U.S firm’s controversial contract for online payment system

Thestar.com
May 10, 2021
David Rider

Torontonians should soon have more online options to pay fees and fines to the city, after approval of a controversial contract with U.S. firm PayIt.

Council approved a three-year contract with the Missouri-based tech startup that can be extended, at the city’s discretion, to four or five years.

The firm, expanding to Canada and hoping to land its biggest client yet, approached Toronto with an unsolicited offer to use its “unique” technology to replace the city’s many pay systems with one cloud-based online interface.

City council last year rejected a city staff request to award PayIt a sole-sourced contract, after local tech leaders said homegrown talent was being shut out.

Staff then sought competing bids in a “Swiss challenge” process and again recommended PayIt. This time council approved, by a vote of 17-8, to entrust city payment systems to the eight-year-old venture-capital-backed company.

The city says it will “partner” with PayIt to launch the online platform, accessed via computer or mobile app, allowing Torontonians to pay, starting this fall, property taxes, utility bills and parking tickets.

Over time, the one-stop interface will add permits, licences and court fines.

People using debit will pay a fee of 1.5 per cent of the transaction and, for credit card users, 2.35 per cent. A free electronic funds transfer option will remain and is expected to be Torontonians’ choice for big bills such as property taxes.

Users can log in as a guest but city staff believe many will want to create personal “digital wallets” to time and track payments. The pandemic has increased resident demands for online payment options, council heard.

City staff estimate PayIt could earn between $20 million and $25 million from the contract, depending on user uptake. The city estimates it could save $11 million over five years on forgone credit card charges and other current expenses.

“We’re looking at dragging the city of Toronto kicking and screaming into the 21st century,” said Coun. Paul Ainslie, chair of the committee overseeing city technology purchases, before the majority, including Mayor John Tory, voted in favour.

Coun. Kristyn Wong-Tam noted persistent calls from members of Toronto’s vibrant tech community to run a full competitive bid process that starts with city residents’ needs, rather than what a U.S. firm says it can offer.

Wong-Tam said exactly how the contract will work and who it will benefit most remained “foggy.” Her motion to pause the contract until the city finishes its digital infrastructure plan failed by a vote of 8-15.

Council also voted unanimously to keep the ban on e-scooters in public places, effectively preventing private scooters from using public roads and any rental companies from making inroads in Toronto despite significant lobbying.

The vote comes after city staff recommended against participating in a provincial pilot project over concerns with safety, insurance and legal liability for the city.

The council meeting continues Thursday.