The world's largest payment companies are fighting for their own piece of the U.S. coronavirus stimulus: an assignment to help distribute some of the relief money that will be sent to millions of Americans in the coming weeks.
Visa Inc. and Mastercard Inc. are lobbying the Treasury Department to be included in the options that the agency uses to disburse funds, as are smaller firms PayPal Holdings Inc. and Square Inc. Their argument is if the government is looking to get money quickly and safely to families across the country, it needs to get with the 21st century.
"The features of the modern payments world are ideally suited to help here," said Jodie Kelley, chief executive officer of the Washington-based Electronic Transactions Association, which represents more than 500 companies in the industry. "We are fast, we are secure and no one has to touch anything."
Getting picked for the program would be a boon for payment companies, which often levy fees each time money is sent on their networks. The firms have been battered by the slowdown in consumer spending as governments around the world ordered people to stay home and businesses to close.
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Most firms lobbying the Treasury Department have offered a discount from what they normally charge. One option, according to a person familiar with the matter, would be negotiating a flat fee for the work, rather than charging per individual.
The Treasury Department hasn't announced how it plans to disburse the checks. It will probably deposit funds directly into bank accounts using information it has from taxpayers, and Secretary Steven Mnuchin said on CBS' Face the Nation on Sunday that the payments may begin arriving within three weeks.
By some estimates 14 million people in the U.S. don't have bank accounts, and many others still get refunds from the Internal Revenue Service by check, meaning the government doesn't have their bank information.
The relief bill includes direct payments to low- and middle-income Americans, expands unemployment benefits, and gives many companies access to emergency financing and tax breaks. Hoping to stave off an economic collapse, the Treasury Department is pushing to get the money out quickly. Depending on income, a person can receive as much as $1,200, plus $500 per child.
Visa and Mastercard have spent years building out two new networks -- Visa Direct and Mastercard Send -- which can instantly deposit funds into billions of bank accounts around the world.
"We believe we have an opportunity and responsibility to help support the efforts to respond to and recover from this crisis," said Seth Eisen, a spokesman for Mastercard. He said the company doesn't have any insight into how the government will decide to distribute the money. "We stand ready to help."
PayPal and Square are pushing their digital wallets -- PayPal, Venmo and Square Cash -- as other options. The wallets have become a popular alternative to bank accounts for U.S. consumers in recent years.
A spokeswoman for Square pointed to a tweet from CEO Jack Dorsey last week asking the government to let the company help with the disbursements.
A Treasury Department spokesman didn't reply to a request for comment, while a spokesman for Visa declined to comment. A representative for PayPal confirmed that the company is in talks with the department.
Being included in the unprecedented payout could help electronic payment companies with a longer-term goal: getting more ingrained into the federal benefits system.
While direct deposit is often the most popular way to receive government assistance, agencies have been increasingly turning to prepaid cards and other forms of electronic payments as a cheaper alternative to checks. In recent weeks, lobbyists for prepaid card providers have also sought to play a role in the stimulus disbursements.
Federal, state and local government agencies disbursed $137 billion through prepaid cards in 2018, or 2% of total expenditures, according to a September report by the Federal Reserve. The Supplemental Nutrition Assistance Program, which used to be known as food stamps, sent the largest share.
As the lobbying continues, one issue that the payment companies are trying to sidestep is that President Donald Trump seems to like the symbolism of Americans receiving a check in the mail. He has said he wants his name to be on the checks, or at least on a letter accompanying the money to show that it's from him, according to people familiar with the matter.
Business on 04/02/2020