Mastercard has partnered with Liberty Tax to provide Netspend Liberty Tax Prepaid Mastercard to U.S. citizens, where they can receive tax refunds and stimulus payments within days of filing their 2020 taxes.
The prepaid debit cards are reloadable and can be used for any future economic impact payments (EIP) dispersed by the U.S. Treasury Department and the IRS.
The offering is another way of expediting stimulus payments for the underbanked. Last year, Mastercard and Comerica Bank reached an agreement with the U.S. Department of Treasury's Bureau of the Fiscal Service to deliver the Direct Express Debit Mastercard, which provides millions of Americans with federal benefits electronically, even if they do not have a bank account.
Through the Netspend Liberty Tax Mastercard prepaid cards, taxpayers have quick and equitable access to the direct stimulus payments. Taxpayers can receive their EIPs within 10 business days after activating their prepaid Mastercards.
"Prepaid cards help to bring more people into the digital economy and offer an added level of convenience, with funds available faster and eliminating the need to cash a check," a Mastercard spokesperson told Payments Dive.
The move comes as millions of Americans are excluded from the EIPs due to not filing a tax return or sharing their payment information with the government. Many American households can face delays regarding their EIPs, as they lack a bank account and rely on cashing out checks received from the IRS.
According to the Federal Reserve, nearly 6% of Americans were unbanked while 16% were underbanked in 2020.
Nearly 33 million unbanked Americans will have to wait for a paper check to arrive, which could take up to 20 weeks. It costs 2% to 3% to cash a check at a financial institution that consumers don't bank with and Americans collectively spend $1 billion of their own money just to cash their checks, according to the Financial Service Centre of America.
Customers who file for their taxes through Liberty Tax can receive 30% off their tax preparation fees, a $15 bonus, and an additional $15 credit when they select the prepaid Mastercard for the disbursement of their tax proceeds.
The prepaid cards can be used for everyday needs like shopping online or contactless payments which gathered momentum during the pandemic. The prepaid cards come with Mastercard ID Theft Protection to avoid identity theft.
The IRS has also been issuing EIP cards to customers who didn't provide bank account details for their tax returns, or who opted for one of the cards. In January 2021, the Treasury and the IRS shipped out nearly 8 million EIP cards "to speed delivery of the payments to reach as many people as soon as possible." The EIP cards are issued by MetaBank, N.A., powered by Visa, and can be used for in-store or online purchases.
Payment platforms like Square's Cash App are helping to process stimulus payments directly to customers' accounts, while digital banks Chime and Current have already started providing stimulus payments to customers last week.
Chime tweeted last week that it has processed nearly $600 million of EIPs to 250,000 account holders last week itself. Incumbent banks like Chase and Wells Fargo have come under fire for not being quick enough with processing the stimulus payment.
Mastercard is also "working with Walmart to offer qualifying Americans their stimulus funds through the Walmart MoneyCard, powered by Green Dot," the Mastercard spokesperson said.