Fast Payments Push Governments to Rethink Tax Refunds

Watch more: Shari Freidenrich of Orange County Treasury

Fast payments continue to redefine expectations across the private and public sectors. With taxes top of mind this year, several use cases have emerged around how public agencies return money owed to taxpayers, from refunds to other disbursements.

It sounds simple, but there’s a complication. Few environments illustrate the tension between legacy infrastructure and modern expectations as clearly as government finance, where complex processes, aging systems and paper-based workflows remain deeply embedded.

Case in point: According to Shari Freidenrich, CPA and treasurer-tax collector for Orange County, California, those constraints are structural rather than philosophical. As she told PYMNTS as part of the Visa Direct Customer Journey series, public agencies often rely on long-established processes because they lack competitive pressure to modernize.

The result is a payment environment that still depends heavily on mailed checks, despite mounting evidence that paper introduces friction, risk and uncertainty for both agencies and the public.

Taxpayers Want Government Refunds to Arrive Quickly

Taxpayers, Freidenrich said, increasingly evaluate government interactions against the same digital standards they experience elsewhere.

“People do want to have fast access without extra steps, but they also want to make sure they have confidence that the payments will arrive safely and predictably,” she said.

Speed matters, particularly when funds are being returned, but convenience and security are equally central to public trust.

Orange County’s own data reflects that shift. Roughly 75% of property tax payments are now made electronically, Freidenrich said, with about half of those coming through ACH-based eCheck payments. That scale matters as a measure of adoption, and it offers evidence that taxpayers are willing to engage digitally when systems are clear, reliable and secure.

Yet discomfort remains around sharing bank account information, which limits how governments can send money back. “A lot of people are uncomfortable giving us their bank account information,” she said, even as they expect digital speed.

Expanding Payment Choice and Moving Away From Checks

That tension has pushed Orange County toward offering multiple payout options rather than forcing a single method. Debit cards and, eventually, digital wallets allow governments to return funds without requiring full bank credentials.

Freidenrich described card-based disbursements as a middle ground that balances speed, privacy and consumer protections. “It allows them to have some protection on the debit card … without intruding too much into their personal privacy,” she told PYMNTS.

The policy environment is also shifting. Freidenrich pointed to a federal executive order directing federal agencies to move toward electronic payments and away from paper checks, with limited exemptions. While local governments are not bound by that mandate, the signal is clear. Paper checks are viewed as inefficient, expensive and vulnerable, especially as mail fraud rises.

Faster Payments Benefit More Than Taxpayers

Refunds are only one use case. Faster payment methods also apply to vendor payments, benefit disbursements and one-time outbound transactions where traditional ACH or wire processes introduce unnecessary controls and delay. Checks, Freidenrich said, generate follow-up calls, uncertainty and administrative burden. “People are calling [and asking], ‘When is my check going to be there?’” she said, describing the strain that mailed payments place on staff and taxpayers alike.

Fast payments change that dynamic by offering confirmation, predictability and immediate access, reducing inbound inquiries and operational drag.

Nowhere is the impact clearer than in tax administration itself. When refunds take weeks to arrive, taxpayers may forget they are owed money at all. Freidenrich noted that uncashed checks remain a persistent problem nationwide. In California counties, unclaimed refunds can eventually be absorbed into general funds under state law. “My goal is: If you’ve got money coming, we want to get that money back to you,” she said.

Faster payouts can largely eliminate that outcome altogether. If funds are delivered quickly and digitally, there are no checks to lose, forget or steal, and no refunds left languishing unclaimed.

Digital Payments Are Safer Than Checks

In addition to speed, modern rails offer stronger protections than paper ever did, Freidenrich said. Mailed checks can be intercepted without detection, while digital payments rely on account validation, encryption and established network controls.

Cost savings follow naturally. Every paper check carries processing, mailing and reconciliation costs that taxpayers ultimately fund. Digital disbursements reduce those expenses while improving visibility and control. Still, Freidenrich emphasized that transaction costs must remain low. “If the costs are too high, then we have to turn to other options,” she said, underscoring the importance of competition and scale.

For Freidenrich, fast payments are about aligning government finance with how people live and work today. Faster disbursements build trust, reduce fraud exposure and allow taxpayers to put their money to use immediately, including for local businesses and entrepreneurs.

“These long delays really make systems look outdated,” she said. “If we can send you the money timely and securely, government gets out of your way and lets you get back to creating income and jobs.”