By Rourke O’Brien, U.S. Department of the Treasury (@USTreasury)
Nearly every American household receives some form of government payment—from social security to tax refunds to the Supplemental Nutrition Assistance Program (SNAP) and cash assistance. This “high touch” financial interaction between the government and its citizens—many of whom are low-income and financially underserved—offers an unparalleled opportunity to shape how many consumers interact with their money. Yet, even amidst the push to all-electronic delivery of government payments, the vast majority of government agencies have yet to actively explore how the process of disbursing such payments can be harnessed to actually improve financial outcomes for Americans.
We at Treasury are working to change that.
For starters, last fall Treasury announced that users of the Direct Express® card, a prepaid debit Mastercard® that individuals use to access federal benefits, including social security, would have access to Payperks®. Payperks® is a financial education platform that uses sweepstakes financial rewards to encourage users to engage with its web- and mobile-based financial literacy curriculum. To date more than 160,000 users have signed up and taken more than 1 million financial education modules online. We feel these numbers underscore the tremendous potential of innovations in government payments to reach vulnerable populations and improve the financial well-being of families.
Every month, federal, state and local governments disburse hundreds of billions of dollars to individuals through an array of programs. As we continue to think about how government payments at the federal level can be harnessed to increase access and capability, we recognize there are exciting opportunities to test new strategies at the state level where payments are made to households through a range of programs, including Temporary Assistance For Needy Families (TANF), SNAP, Unemployment Insurance, and Child Support. How might states use their government payment platforms to increase access to sound financial products? Or to encourage saving? Or to help families track spending and make a budget? And how might those strategies inform changes to federal government payments?
To catalyze this effort to embrace technology and innovation in government payments, the President’s Budget request for FY2014 includes $5 million for a Financial Capability Innovation Fund (FCIF) to be housed here at the Department of the Treasury. The Fund is designed to support the development of financial access and capability tools through the electronic disbursement of government payments, with an eye to testing what works at the state and local levels. Some of the ideas we’re interested in exploring include:
- Providing applicants for TANF benefits the option of opening a high-quality transaction product as part of the enrollment process where benefits could be automatically deposited.
- Harnessing the child support delivery process to facilitate savings, perhaps through piloting the automatic deposit of a fraction of the child support payments into a savings account in the child’s name.
- Increasing the functionality of benefits cards for unemployment insurance by adding the capacity for bill pay.
- Using automated systems (e.g. through text messaging) to help families track spending and better allocate their benefits over the month.
The consumer financial landscape is quickly changing as technology and innovation wholly reshape the consumer experience. While our office strives to stay abreast of new developments, we look to you in industry to help us see what’s on the horizon. So we want to hear from you regarding whether there are any innovations in access and capability that we should be exploring in the government payments space. As we continue to explore the potential of government payments, we look forward to engaging with you on innovative ways to improve the financial well-being of American families.
Rourke O’Brien, Senior Policy Advisor, Office of Consumer Policy
Rourke O’Brien is a Senior Policy Advisor with the Office of Consumer Policy, US Department of the Treasury. He can be reached at Rourke.OBrien@Treasury.gov.