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U.S. firm set to win controversial city hall online payment contract, despite objections from Toronto’s tech sector

U.S. firm set to win controversial city hall online payment contract, despite objections from Toronto’s tech sector
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Toronto city council appears set this week to approve a U.S. firm’s proposal to move online a host of payments Torontonians make to city hall, despite objections to the deal from members of the local tech community.

Missouri-based PayIt, via its new Canadian subsidiary, says it can replace 11 separate portals for property taxes, parking permits, parking tickets, water bills and more with one easy-to-use interface accessed via mobile app or computer.

Residents would pay by credit card, debit or electronic fund transfer, either as a “guest” or with a personal digital “wallet” to schedule or review payments.

City staff recommend “partnering” with PayIt on a three-year contract, with city options for up to two one-year extensions, saying it provides “a personalized digital experience for citizens,” in a city behind others on electronic payment options.

“It really could position the city as a leader” in the field while providing better service to residents demanding more online options during the pandemic, city transformation director Assim Hussain told executive committee last week.

“We know that the province is talking to PayIt as well.”

Data would remain city property, stored in Canada. The city wouldn’t pay upfront development costs. PayIt would charge residents using debit cards 1.5 per cent of the cost of the transaction. The fee for credit card users is 2.35 per cent.

Electronic bank transfers would continue to be no charge to users. City staff expect that to remain the popular choice for big bills such as property taxes.

City staff estimate PayIt could earn between $20 million and $25 million from the contract. They think taxpayers could save $11 million over five years on costs, including credit card fees currently paid by the city.

Critics say Canada’s most populous city is set to take a risky chance on an unsolicited pitch from a Kansas City startup with no clients of comparable size.

City council last year voted against a sole-source contract with PayIt. Staff then mounted a “Swiss challenge” bid process to see if any firms could make a better pitch. Twenty-two firms downloaded the terms, but only one Toronto company, SQL Power Group, submitted a bid, which staff rejected saying it didn’t meet criteria.

Bianca Wylie, a local open government advocate and co-founder of Tech Reset Canada, said city council should reject the PayIt proposal and start anew.

“This is a large public digital infrastructure deal — it’s worth $20 million to PayIt at the low end,” from Toronto’s “stable and guaranteed tax base,” she said.

“We don’t know enough about the terms of this deal to know that it’s good one. Look at Presto,” transit card, she said. “Look at (toll highway) 407.”

SQL president Sam Selim told the Star that, despite an unusually short timeline to respond, his firm proposed a payment platform with more functions for less money. If PayIt was forced to match but still won, he would be OK with that, he said.

Instead, city staff stopped reviewing SQL’s bid after it failed to get enough points to progress past a section that included a request for references to show the firm’s ability to drive “digital adoption” and other modernization goals.

SQL wasn’t told before bidding that particular question was worth 72 points out of 100, while six other questions in the section were worth only 28 points combined.

“The city should issue a standard full-scale request for proposal that doesn’t give one company special standing, where the best bid and best price wins,” Selim said.

“The Swiss challenge was flawed. They didn’t look at our solution at all, they were not remotely interested in finding an alternative,” to PayIt, he said.

At executive committee, city staff strongly rejected any suggestion of favouritism, noting a city fairness monitor reviewed the Swiss challenge process and monitored its application, without objections. They also noted the city can, under proposed terms, cancel the contract for any reason.

Mayor John Tory voted for the proposal at executive and he will urge full city council, at its meeting scheduled for Wednesday and Thursday, to do the same, said his spokesperson Lawvin Hadisi.

Tory believes city staff addressed the complaints and “that this agreement will make life easier for the residents of Toronto — the people the city serves,” she said.
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