Much, MUCH attention has been given to how benefits from the federal government’s CARES Act will be distributed. Since many individuals will receive this payment—and others, such as unemployment insurance—though a paper check, it may be weeks before some receive their money. Though it is difficult to change processes inside massive government operations while meeting the needs of all citizens, this current pandemic underscores the benefits of electronic payments.
Speed matters here. The current environment is the best illustration of the value of electronic payments and, hopefully, will be the impetus that government entities are looking for to prioritize an improvement in quickly and safely delivering funds to their constituencies. The financial benefit of electronic payments over paper payments already exists, and has been understood for years.
This article in PaymentsSource looks into the struggle of trying to change a payment process in the midst of the current chaos:
Fintech companies see big opportunities to help the government connect consumers and small businesses and banks with funds, but many gaps stand in the way, said Jareau Wadé, vice president of growth at Finix, a San Francisco-based payments software infrastructure provider that launched in 2015.
“A lot of fintechs want to be involved in helping disburse government funds, but they can’t because they’re not banks. And a lot of banks who could help are choosing not to, because they’ve decided it’s not worth it,” Wadé
The government’s best option might be testing an approach that offers consumers several options for receiving funds.
“Ideally, consumers could go to a central location and pick any number of different disbursement options and there might be some complications with fraud and ID, but it would still be better to get funds out quickly, especially to the millions of people who are underbanked. There are more underbanked people operating in cash than most people realize,” Wadé said.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group