Wachovia Merchant Services, a merchant processing joint venture between Wachovia Corp. and First Data Corp., has signed a deal with Link2Gov Corp. to help people and businesses pay taxes and government fees by telephone and through the Internet.
Link2Gov designed the service and delivered the technology, and Wachovia Merchant Services, of Atlanta, is processing the payments, which can be made by credit and offline debit card or electronic check. 
The Nashville technology company facilitates government-consumer and government-business transactions, such as motor vehicle registration and driver's license renewals; hunting, fishing, boating, and professional licenses; payments for traffic tickets, utilities, and taxes; corporate filings; and building permits.
"Government online services is an emerging market," said Jerry Ferlisi, senior vice president and general manager of Wachovia Merchant Services.
More and more, consumers and businesses expect to conduct business on the Web, he said. "Government agencies run for our service now," Mr. Ferlisi said. "The concerns among citizens about confidentiality of providing information online has vanished."
As federal, state, and local entities have shown willingness to let constituents conduct business online, card companies and transaction processors have seen opportunities and dollar signs.
"The government is the nation's largest merchant, period," said Kevin Gallagher, director of e-business strategies at Wachovia.
From the consumer perspective, "convenience is the No. 1 factor," Mr. Gallagher said. As people get used to dealing with agencies through remote channels, governments will create systems that involve less red tape, he predicted.
Richardson M. Roberts, the president and chief executive officer of Link2Gov, was previously head of PMT Services Inc., the credit card processor and merchant-acquirer that was bought by Nova Corp. He called the U.S. government "a $490 billion business in payment and services."
"This process started at midnight on January 1, 2000," Mr. Roberts said, "when the lights did not go off," and officials were no longer preoccupied with the Y2K problem. Also, a lot of the money governments had frozen to deal with Y2K is now available for projects like online service development, he said.
The pressure to go ahead with online services comes mostly from government executives who realize what they can save by moving services from their offices to the Web, Mr. Roberts said. A vehicle registration renewal, which costs a state government $8 to process, can be reduced to a $1 procedure online, he said.
"It seems to be the smaller dollar amounts that are the most interesting," and transactions involving the smallest amounts, such as licenses and similar point of sale services, can generate the highest percentage of savings, Mr. Ferlisi said.
"At the moment, government agencies make sure to provide as much access to as much service as possible, mainly via the telephone," he said.
Charles M. Bruney, senior vice president at Speer & Associates Inc. of Atlanta, said change will come from businesses rather than governments. "If there is a buck to make, business will do so," he said. "It will be not so much about government-to-consumer but more government-to-business."
That might change soon, said Jennifer McCollum, director of communication at egov.com, a private company in Atlanta that competes with Link2Gov. "Either way, everyone needs a payment processor," Ms. McCollum said. She does not think the announced cooperation between Wachovia and Link2Gov is "much news."
"The only advantage to Link2Gov is that in some cases [the government agency] has an account with Wachovia, which could make things easier," she said.
Egov.com uses Paymentech Inc. of Dallas, which is owned by First Data and Bank One Corp., as its merchant processor.
