The federal government is not exactly the poster child for modern payments distribution. It’s a fact that the last year – and two rounds of direct stimulus payments to consumers – has made quite clear. As it turned out, paying out stimulus funds to hundreds of millions of Americans in short order was an incredibly heavy lift. The fact that the government needs to immediately modernize its payments capabilities is something that everyone knew, according to Ingo CEO Drew Edwards – but what has escaped the conversation is the need to identify the actual core problem.
“The big Achilles heel right now between the government and modernizing its disbursements is the lack of digital engagement with citizens,” Edwards noted.
It’s not that the government lacks information about citizens. They know addresses, Social Security numbers, names, earnings, dates of birth and more. And if you were to ask, the government would likely affirm that it’s offering citizens payment choice when it comes to disbursements: check or ACH.
What the government is missing right now, and what it needs to expand upon in order to “catch up with where the puck’s going,” is the payment experience.
Edwards said what the government needs to build – in partnership with others, not on its own – is a choice that is on demand, relevant, verified and digital. This means it must solve its engagement problem to create an interactive touchpoint with recipients.
The Government’s Engagement Problem
According to Edwards, the problem isn’t that the government lacks the information it needs to authenticate properly. Instead, it lacks the necessary recipient experience to enable instant payments.
And it’s a problem that is fairly unique to the government, he noted.
“The real missing link is that there is no digital engagement,” Edwards explained. “There is no customer experience between the government, as a payer, and the citizen recipient. Right now, the IRS has everything it needs, except for one big, important thing: the ability to electronically engage a citizen safely, asking how she wants her money.”
The concept and the preference of moving money fast, he said, has been well-established in the gig economy, the insurance industry and even the banking space. Those entities start from a place where they know their customers and how to communicate with them to optimize payments and payments choice. If the government wants any hope of keeping up with the modern shape of the market, Edwards said, it needs to figure out the same thing.
A Challenging Climb
It’s not going to be an easy climb, because it will force the government and citizens to engage in a different kind of relationship than they ever have – and that will require trust.
“The technology exists. The bigger problem here, or the bigger issue to solve, is how the government gets 200 million Americans to digitally engage with them. Moreover, fraud is always a concern. Consumers are hardwired to ignore inbound messages from the IRS as attempts to steal their bank account information. We’ve all gotten those robocalls,” said Edwards. Proper touchpoints with the American people, communications that render it trustworthy, and fraud management to keep the inevitable bad actors under control are all required.
But the first step to solving a problem is recognizing that it exists. The government does not need to rebuild its payments infrastructure from the ground up – but it does need to partner with the payments industry to leverage what is already proven and modernize. And that, along with creating a digital engagement between the governmental payers and the citizen payees, will make it possible to achieve real optimality when it comes to pushing out a payment quickly and safely.
As Edwards noted: “This is not an insurmountable problem, but it is a problem.”
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