The London Borough of Havering has appointed Citi to supply pre-paid cards to replace cash and cheque payments.
Potential uses for the pre-paid cards include, payments for social care budgets, asylum benefits, and housing benefits.
Havering Council says the move will enable it to more than halve its existing processing costs for cash and cheque payments.
Twenty-nine other councils have also joined the Government Procurement Card (GPC) framework arrangement, which provides for an aggregated approach to procurement costs.
Under the Citi system, councils control the amount and flow of funds available to end users and benefit from standardised management information and control programmes. End users can access funds in several ways including via ATMs and over the counter.
The London Borough of Lewisham is also using Citi pre-paid cards for payments to young people leaving care.