Earlier this week, the U.S. Treasury announced that Pay.gov, the government’s web based collection portal for payments to federal agencies, will now accept both PayPal and Dwolla as payment options. According to the announcement, accepting payments via “digital wallets” is part of an ongoing effort to move away from paper-based processes to more efficient and secure electronic transactions.

“Digital wallets provide convenience, simplicity, and a trusted customer experience, while achieving cost effectiveness for the Federal Government,” said Corvelli McDaniel, the Treasury official heading up the government’s shift to electronic payments, a longterm project of the Treasury Department’s Bureau of the Fiscal Service. According to McDaniel, the goal of the partnerships with Dwolla and Paypal is to expand the options individuals have for transactions with the Federal Government, providing them with greater choice and a better user experience.

For example, small businesses or individuals who are required to submit a court filing fee at a U.S. Court, or anyone who wishes to make a donation to the National Endowment of the Arts, will have similar payment options currently available to them on popular private sector websites.

In Fiscal Year 2014, the Fiscal Service collected $3.73 trillion in revenue processing 400 million transactions through several programs, including Pay.gov. Nearly 98 percent ($3.69 trillion) was settled electronically. The Fiscal Service’s objective is to provide a suite of electronic payment options to achieve the long term goal of moving to electronic transactions from less efficient paper-based transactions using services available in the private sector when possible.