Speed: It’s How Fintechs Say They Can Help With U.S. Stimulus Payments

Speed is an oft-cited cultural difference between traditional financial service companies and their fintech counterparts, especially start-ups. And that’s a big benefit fintechs say they can offer the U.S. government as it prepares to dole out the stimulus payments enacted under the $2 trillion CARES Act.

The list of payment platforms that have reached out to the government to offer help in distributing funds allotted for many Americans includes Square’s Cash App, Paypal’s Venmo, and bank-owned Zelle. They say they can get the funds to individuals much faster than the government can cut checks or direct deposit through ACH payments.

But speed isn’t the only argument. The platforms say they are better positioned to reach unbanked populations. According to Federal Reserve data, 14% of Americans with an income of less than $40,000 do not have a bank account. 

Chime, the largest U.S. digital bank, took the offer to help a step further this week with a pilot project that instantly deposited funds into the accounts of 1,000 randomly selected customers. The bank used its own capital to front the money, and CEO Chris Britt says it may expand the pilot if it receives reassurance from the government that Chime users can’t redirect the payments to other bank accounts.

COVID-19 is teaching us — the global us — many lessons across numerous industries. We think this may be a tipping point for fintechs, where the value they can provide causes them to become more firmly rooted in mainstream life, financial systems, and government.