Abstract
Electronic payment (e-payment) of state taxes and fees can enhance government efficiency and improve citizen satisfaction. This article provides background on e-payment trends and discusses state government acceptance of e-payments, citizen use of e-payments, and the key challenges associated with acceptance and use of e-payments. It finds that Automated Clearing House is the most commonly accepted e-payment mode for business-related taxes, and credit cards the most commonly accepted mode for individual income taxes and fees. Debit cards are accepted by some states but are not widely utilized. Interchange and merchant fees pose the most significant challenge to e-payments; state governments must adopt policies addressing who will pay these fees and how they will be paid.