United States residents are battling numerous challenges during the ongoing pandemic, with many confronting medical, personal and financial hurdles that they have never before faced.
One in every three Americans has experienced a loss of income since the crisis began, for example, and this can be especially concerning for those who live paycheck to paycheck and have little in the way of savings.
The tough financial realities U.S. consumers are witnessing have forced many to rely on financial relief from federal and state agencies, but outdated disbursement methods can present logistical and financial hurdles for these agencies. For starters, each check can cost about $2.50 or more with fees, and these costs can add up quickly when payments are sent out to millions of individuals. This has prompted many agencies to examine digital, instant disbursement methods that can give them the flexibility to swiftly send funds to those who need them the most.
The December edition of the Disbursements Tracker(R) examines the financial and logistical hurdles that government agencies face when trying to send disbursements to residents, as well as how tapping into digital disbursement methods — and instant disbursements, in particular — can help them avoid the hiccups and costs that come with delivering funds via postal mail.
Around The Disbursements Space
The stimulus payment deadline for U.S. residents who are not required to file tax returns, typically because they fall below the income threshold, passed Nov. 21, meaning many low-income families were the last to receive stimulus funding from the IRS. This reveals that shifting from paper checks to faster, digital payment methods could be key for the IRS and other agencies as they seek to send funds to financially strapped consumers. Such a transition could be particularly critical if the federal government opts for a second stimulus round.
Nongovernment entities are also confronting obstacles as they work to meet evolving expectations regarding payment speed. Ninety percent of consumers want to receive payments quickly as opposed to slowly, and many businesses do, too. Despite these desires, many do not have the option to get payments swiftly, said Sherri Haymond, executive vice president for card network Mastercard. Consumers and businesses still receive roughly $30 trillion annually via paper checks, leading to slow speeds and frustrated recipients. Mastercard is aiming to solve these frictions, however, and it recently partnered with instant payment provider Ingo Money to boost disbursements speed for banks and corporations.
Better communication regarding instant payments and what they entail could also be key to boosting their adoption. PYMNTS research revealed that 58.4 percent of consumers say they do not receive instant nongovernment disbursements, even though 45.3 percent of those who made the disbursements said they did so through noninstant methods. This means eliminating the gap between payors’ and consumers’ perceptions regarding instant payments could be the key to satisfying both parties.
For more on these stores and other disbursements headlines, read the Trackers’ News and Trends.
Why Offering Disbursements Choice Is A Must For Government Agencies
The pandemic is pushing consumers to seek fast relief, meaning check-based payments and other manual disbursement methods no longer cut it for many. It is still necessary for government agencies looking to provide much-needed aid to offer disbursement methods that can reach underbanked and unbanked individuals, however, especially as they are often those most in need of financial assistance.
In this month’s Feature Story, Linda Jun, senior policy counsel for consumer financial advocacy group Americans for Financial Reform, discusses why offering digital disbursement methods that can satisfy individuals across the socioeconomic spectrum must be a crucial consideration for government agencies.
Deep Dive: How The Pandemic Is Pushing Government Agencies Toward Instant Payments
Many consumers are struggling to stay afloat during the global health crisis, leading agencies that offer aid to seek out faster ways to send them funds. This is especially challenging because many federal and state branches are geared toward sending paper checks in the mail — no matter how impractical and costly this method becomes as they make payments in the millions.
This months’ Deep Dive examines how the pandemic is driving consumers to seek instant disbursement methods, especially as they become more accustomed to faster payments in other areas of their lives.
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