Following the 2021 tax season, the IRS reported there was more than $1.3 billion in outstanding tax refunds from the year 2017.1 Whether it was because of human error, government oversight or simply a refund check mailed to the wrong address, this money stands to be left on the table.
Similarly, in the case of the $850 billion in Economic Impact Payments from the federal government, there was $1.8 billion unclaimed, due to a combination of consumer refusal, returned funds and checks that went unclaimed.2 That outstanding combined $3.2 billion is just a snapshot of the unclaimed government payouts lost from inefficient paper checks.
With the 2022 tax season already under way, the time is ripe for businesses that want to tap into payments technology to give them an edge with their customers through fast, efficient tax refunds. In the case of the Economic Impact Payments, direct deposit and debit cards were a popular choice for payout methods, which set the tone for what consumers now expect out of their tax refunds: fast and frictionless methods that match their preference.
The common thread of the billions left in unclaimed government payouts comes back to not having a ubiquitous payout method that makes it quick and easy for consumers to access their funds. Luckily, businesses can level the playing field and change the future of tax payouts by adopting efficient payout methods that align with customer preferences.
Innovating Tax Payouts with Modern, Digital-First Solutions
Tax season is a critical time for all consumers and for businesses that serve these consumers. Payments technology that removes the latency and friction in tax refunds can dictate how customers choose to file. But the benefits of payments technology to innovate tax refunds extends far beyond the initial payout itself. For instance, through partnerships with both online and brick-and-mortar tax preparers, customers can leverage a Netspend debit card to receive their tax refund via direct deposit, and also use their card to manage their everyday finances.
Customers have the option to have their tax refund loaded onto a Netspend debit card. These customers can also enjoy the added benefit of Netspend’s card solution to manage not only their tax refund, but also their everyday finances.
A debit card tax payout solution — merges the best of both worlds by having a physical card component with digital payments capabilities — plus consumers may get their tax refunds up to five days faster into their Netspend account with direct deposit.3
Outside of direct deposit, reloadable debit cards offer other desired features that consumers value today: loyalty and rewards, mobile access and real-time transaction alerts. All this matters for attracting and retaining customers in today’s digitally-driven world.
Driving Customer Loyalty Through Modern Payment Solutions
With the ability to link the features and functionality of a physical and digital experience to get funds into people’s hands faster, prepaid and debit cards give customers flexibility and the ability to access funds through multiple options.
Businesses can also leverage prepaid and debit card solutions to improve customer loyalty, drive engagement and increase repeat visits. With these products and services, businesses can take advantage of powerful purchasing tools and deep insights and analytics that help customers stay connected to their brand. Netspend partners receive a wealth of data, analytics and real-time program management tools to help stay up-to-date and on-track with their card programs.
More than just convenience, debit and prepaid card solutions can allow consumers to connect to the digital payments ecosystem and can provide tax-service businesses with the tools they need to quickly and efficiently manage and distribute tax refunds and build stronger customer relationships.
About the Author: Derek Tanis is the Senior Vice President leading Netspend’s Consumer Partnerships team, where he is responsible for a wide variety of strategic partnerships including PayPal, Western Union, ACE, Samsung, 7-Eleven, HEB, The Austin Football Club and Albertsons as well as all of the brick and mortar distribution partnerships across the country. Derek leads a sales team where they are responsible for selling the company's innovative suite of payment solutions including embedded finance, card programs and program management services. Tanis holds a Bachelor of Arts degree from the University of North Carolina at Chapel Hill and a JD from the University of Colorado School of Law in Boulder.
1 CNBC, “Taxpayers are leaving $1.3 billion in tax refunds on the table,” April 2021, https://www.cnbc.com/2021/04/05/irs-still-has-2017-tax-refunds-for-over-1-million-americans-who-did-not-file.html
2 KRON, “Nearly $1.8 billion of stimulus money went unclaimed in U.S.,” July 2021, https://www.kron4.com/news/national/nearly-1-8-billion-of-stimulus-money-went-unclaimed-in-u-s-did-your-state-cash-their-checks/
3 5 days faster funding claim is limited to Federal tax return funds and is based on a comparison of our policy of making funds available upon receipt of payment instruction versus the typical banking practice of posting funds at settlement. Fraud prevention restrictions may delay availability of funds with or without notice. Early availability of Federal tax return funds requires IRS support of direct deposit and is subject to the timing of IRS payment instruction. IRS processing times will not be affected. For up-to-date information from the IRS, visit www.irs.gov/refunds