Crucial financial safety net provisions enacted in the CARES Act have begun to taper off, and prospects for a second stimulus package remain uncertain.
As vulnerable populations continue to struggle, there is a continued need for non-governmental actors — from national foundations and Fortune 100 companies to grassroots worker associations and faith-based communities — to help fill in the gaps with rapid response support.
As many organizations discovered at the outset of COVID-19, distributing emergency relief funds to recipients can be dishearteningly complicated. Speed is paramount for these initiatives: Nearly half of U.S. households lack enough liquid savings to cover three months of living expenses, and each passing day matters as monthly bills and living expenses pile up.
Yet many private and social sector relief funds face a mundane but critical roadblock: How best to quickly, securely, and cost-efficiently get funds into the hands of end users? This question is as relevant and vexing for philanthropic ventures as it has been for the federal government, whose payment distribution challenges have been covered extensively.
Unfortunately, no one-size-fits-all platform exists to facilitate non-governmental relief efforts to individual households. Rather, viable payment solutions differ depending on which sub-populations funds seek to reach. Payment rail options and potential distribution partners for emergency funds span a few distinct target segments:
Banking status. Recipients with an existing U.S. bank account or reloadable prepaid card can have funds directly deposited into their accounts electronically, which is often the preferred distribution method whenever feasible, and;
Government-issued ID. End users’ access to and/or willingness to share government-issued ID information (e.g., Social Security Number) for verification purposes can inform whether reloadable prepaid and/or wire transfers are options for reaching unbanked recipients.
Timing, fees and touchpoints.It’s important to consider the timeframe and fees associated with each payment option as well as the number of touchpoints. For example, how do you minimize in-person touch points wherever possible given social distancing guidelines? Further, industry experts recommend using payment rails that are well-established and have been stress-tested in prior emergencies, rather than trying to build new payment technology infrastructure mid-stream.
During the past six months, there have been many examples of fintech companies and joint partnerships that made significant efforts to ease the near-term and long-term issues caused by the COVID-19 crisis.
It is a frustrating reality during a time of national crisis that emergency payment options for vulnerable populations remains such a complex and inefficient landscape. Similar challenges frequently arise in the face of natural emergencies (e.g., wildfires, floods, etc.). As we reflect on avenues to strengthen our emergency preparedness and social safety net moving forward, there is a clear opportunity to streamline resources for non-governmental actors to get cash fast to those most in need when it matters the most.