The bank inked a five-year agreement to serve as the financial agent for the Direct Express card program, which helps roughly 3.4 million Americans get monthly federal benefits via a prepaid debit card, according to a Tuesday (Sept. 9) press release.
Most of these cardholders do not have a bank account, and 57% have no other income outside their government benefits, the release said.
“Direct Express plays a critical role in delivering federal benefits payments electronically, especially lifeline payments such as Social Security and veterans benefits,” Tim Gribben, commissioner of the Treasury Department’s Bureau of the Fiscal Service, said in the release.
Fiscal Service concluded that Fifth Third has the “vision and capability” to expand Direct Express via mobile applications and new digital options as the bureau looks to modernize and streamline the payments experience for benefit recipients, according to the release.
Fifth Third will provide new or enhanced solutions such as virtual cards, cardless ATM access, rent and other bill payment services, and digital wallet integration, per the release.
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Bridgit Chayt, head of commercial payments for Fifth Third, said in the release that the bank was selected due to its “commitment to innovation and financial inclusion.”
The United States government, the world’s largest payer, is on the cusp of a digital transformation, PYMNTS reported in July.
At the end of September, the government is due to stop issuing paper checks for disbursements, moving entirely to electronic and real-time methods of payment. This $175 billion overhaul covers everything from Social Security to tax refunds, making it the most ambitious modernization of the government’s payments infrastructure in decades.
It’s happening as 90% of consumers would prefer to receive disbursements instantly if given the choice, according to the PYMNTS Intelligence report “Government Goes Digital: Phasing Out Federal Checks Opens Door to Instant Payments.”
“Ultimately, this policy shift isn’t just a story about the government getting leaner and more efficient,” PYMNTS wrote. “It could be a harbinger of what’s next for the private sector. After all, if Uncle Sam can go instant, so can, and must, everyone else.”
