A proposed sole-source contract between the city and an American online payment startup is angering some Toronto tech talent who wonder why they are being shut out of a Toronto “modernization” project.
Mayor John Tory’s executive committee on Tuesday recommended that city council tell staff to negotiate a no-contest contract with PayIt, estimated to be worth $13.6 million over three years, with city options to add fourth and fifth years
PayIt lobbied Toronto politicians and city staff to adopt the seven-year-old firm’s “unique” technology it says could replace the city’s 22 electronic pay systems with one easy-to-use cloud-based online interface.
Torontonians would get a digital “wallet” to pay property taxes, parking tickets and more, with new payment options for some services, via mobile app or computer.
Instead of licensing platforms, the city would cede to PayIt user fees from some payment options, including 2.35 per cent of total cost for credit card payments, or $94 on a $4,000 property tax bill if somebody chose that option.
The more Torontonians use the system, the bigger the revenue flow to the Kansas City firm. Residents would retain no-charge options including electronic funds transfer.
City staff told executive committee members the contract shouldn’t be tendered because PayIt would quickly accelerate Toronto’s modernization effort with government-tailored tech and no infrastructure costs for taxpayers.
PayIt would start with a handful of bills, including property taxes and parking tickets, and expand if the partnership with the city is successful.
“They’ve demonstrated being able to move very quickly, in a matter of weeks,” Lawrence Eta, the city’s chief technology officer, said of PayIt, which has clients that include Oklahoma’s government but no cities with Toronto’s population.
When a Star reporter tweeted the proposal, members of Toronto’s booming tech sector — championed by Tory as among the world’s best and most innovative — were shocked Toronto wouldn’t tap their ideas.
“The local tech community employs a lot of people who pay taxes in this city, and I would think that local employment and residential tax revenues would exceed any level of savings the (city) staff identify,” said Craig McLellan, chief executive of Etobicoke-based ThinkOn Inc.
“This city seems fixated on startups and recruiting large foreign employers and ignores (Toronto) scale-ups, which are the real economic engine.”
McLellan said if a traditional “request for proposal” competition is deemed too slow, the city could run a simpler “request for information” process to solicit the best ideas from all potential providers.
He also cast doubt on PayIt’s assurances that Torontonians’ data will stay on Amazon Web Service servers in Canada, citing provisions in the United States-Mexico-Canada Agreement complicating data sovereignty efforts.
“When we don’t get even a chance to respond to a request for proposal, or a request for information at least, once again a Canadian homegrown team player is ignored or missed,” McLellan said, adding that city staff “look for the shortest path.”
Bianca Wylie, an open government advocate who successfully campaigned against the Sidewalk Labs-Waterfront Toronto Quayside partnership, tweeted: “Again the City is reacting to tech vendor business pitch rather than designing core infrastructure requirements.
“This is fundamentally problematic. Residents want one-click services. Ok. Residents also want thoughtfully designed long-term infrastructure. Not mutually exclusive.”
In an interview, Eta said he understands the anger of local tech entrepreneurs but remains convinced PayIt is Toronto’s best solution.
“We do support the local tech community,” Eta said, pointing to a city partnership with local firm Ritual to give Toronto businesses an easy way to accept digital orders.
The proposed deal with PayIt does not guarantee exclusivity for the American company, Eta said, adding he wants to help create an online payment “ecosystem” in which local startups could participate.
“It’s really about the model for (PayIt) to prove their solution and if it doesn’t work there’s no downside to the community,” he said.
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“There are going to be many examples where we continuously reach out to the local tech community. We just needed to accelerate; we’re in a pandemic situation,” he said, with online payments more important than ever.
PayIt did not respond to requests for comment.
City council will have final say at its Tuesday-Wednesday meeting.