Despite all the talk about checks, the Federal Government’s individual stimulus payments will be delivered mostly electronically. This will present challenges and opportunities for the payments industry.
According to the text of the bill that the IPA has seen, stimulus payments can be delivered electronically to any account that the recipient has authorized to be used for the direct deposit of tax refunds.
Allowing money to go to accounts authorized two years ago leads to a lot questions. One would presume that accounts would be verified and no surprise deposits would be made. But, if payments are rushed out the door, individual Americans might find their payments going to unexpected places.
People use prepaid cards for tax refunds to get their money quickly, to separate tax refunds from day-to-day accounts, and as substitutes for bank accounts. In some instances, the recipient spends that money and leaves the card empty. In other cases, the care becomes an on-going spending tool.
Providers should review their portfolios and look at the status of the cards. Are they closed, inactive, or still being used? Can you reach out to current and former cardholders and let them know that they may soon have the option to get their stimulus payments on their cards? This may be a time to offer new cards at no or a low cost for those who have abandoned their previous cards, but might technically have an account on the system. It is also an opportunity to remind current and former cardholders of the features, functions, and benefits of prepaid cards.
Of course, while these payments provide an opportunity to help Americans, there are risks that will come with them.
With so much money being distributed, criminals will look for any opportunity to capture it. Since these are government payments, it is likely we will see schemes similar to the ones that we see every tax season including stolen identities, diversion of funds, and social engineering to tell people that they need do something like pay taxes before they can get their payments.
Providers need to fine tune their fraud detection systems, prepare their call centers for social engineering, and warn their customers of increased risks.
Stimulus payments will be an important tool to help Americans and keep our economy going. The payments industry will need to become a partner in making sure that the funds are delivered and used safely and efficiently.
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