Visa and Mastercard took the Treasury Department’s new payments modernization initiative as an opportunity to pitch services.
The department embarked on the effort this year after President Trump issued an executive order in March calling on the federal government to shift almost exclusively to using electronic payments by the end of September. That means ditching paper checks for U.S. payments as well as U.S. collections from taxpayers and others.
The Trump administration has pointed to several key benefits to pushing government payments into the electronic realm. Chief among them are increasing the efficiency of payments and reducing costs, but there was also an emphasis on reducing the impact of check fraud.
Despite the quick six-month timeframe, the Treasury on May 30 asked the public for input on the federal government’s plan to modernize payments “to and from America’s bank account.” It’s a major undertaking despite the fact that a large percentage of U.S. government payments already use electronic channels.
Before the June 30 deadline for interested parties to weigh in, the Treasury received nearly 250 comment letters from companies, trade groups, individuals and non-profits.
A host of companies in the payments industry wrote to offer the government their advice and services. While fintechs like Modern Treasury, Plaid and Early Warning Services pointed to their technological chops as potentially being beneficial to Treasury in the transition, Visa and Mastercard tried to sell Treasury on their services.
Each of the networks submitted letters explaining how their singular knowledge and experience in the electronic payments realm might be of particular service to the government.
Mastercard stressed its track record in working with unbanked and underbanked consumers, noting how it could be effective in helping Treasury raise public awareness of the government’s latest push toward electronic payments.
The network noted that 14% of U.S. households, or about 19 million, are underbanked in that they have access to a bank account and yet rely on other payment methods like checks, and another four to five percent, or 5.6 million, are unbanked. Mastercard said its survey research showed that underbanked individuals tend to be younger, under the age of 43, so they are “tech-savvy,” but they aren’t part of “mainstream finance.”
It also used the letter to cast some doubt on the ability of less-experienced fintech players to meet the government’s needs
Visa used its letter to the Treasury to angle for more business, beyond its existing involvement in the U.S. debit and prepaid card programs for non-benefit payments. Like Mastercard, it underscored its ability to fight fraud and provide security in payments.
The Treasury said it’s particularly interested in how to build a public awareness campaign for moving the unbanked and underbanked to digital payments.