The U.S. has sent out some 88 million stimulus checks over the last few weeks, paying out almost $160 billion to Americans.
Stimulus checks, designed to jolt an economy that’s been brought to its knees by coronavirus lockdowns, are meant to reach Americans as quickly as possible—though legacy systems have somewhat hampered the process.
As lawmakers debate a second stimulus check, financial technology companies are looking to help millions of Americans outside the traditional banking system get future aid quicker.
Warring Democrats and Republicans have so-far failed to agree on what should be included in a follow-up to the Coronavirus Aid, Relief, and Economic Security (CARES) Act but are expected to table proposals in coming weeks.
A digital dollar, similar to digital currency projects in China and Europe, could mean paper stimulus checks that will take months to distribute by post would be sent to Americans instantly.
In the meantime, internet payments giant PayPal, through its Venmo app, along with the likes of Square’s Cash App and newer digital banks Simple and Chime, have helped Americans get their stimulus checks via direct deposit.
Chime, America’s biggest digital bank by customers, was quick to begin piloting instant stimulus check payments earlier this month.
“For the 25% of Americans outside of the financial system digital payment [systems] like PayPal provide the ability to participate in the digital economy, while also avoiding costly fees,” PayPal spokesperson Tom Hunter, told Fox Business last week.
“In the current environment, we know that fast, easy, safe and secure access to stimulus payments is of high importance to people. By electing to receive the payment through PayPal, recipients can avoid going to a physical check-cashing location, or even missing a paper check if they are sheltering in place at a different address to their registered address.”
Banking industry watchers expect there to be a surge in demand for digital banking services due to the coronavirus pandemic.
“Coronavirus is going to further disrupt the wider banking sector,” said Nigel Green, founder and chief executive of deVere Group.
“It will act as another catalyst for people to seek fintech alternatives to access, manage, use, save and invest their money across the world.”
With financial technology upstarts building out their user base while brick-and-mortar banks are shuttered, bigger tech companies are eyeing financial services.
The likes of Google, Facebook and Apple have all begun offering banking and payment services in recent years.
Future stimulus checks could well reach millions of Americans via the world’s biggest technology companies—bypassing banks entirely.