Square’s Cash App, PayPal’s Venmo, and bank-owned Zelle have all contacted the US government to offer to help it distribute the funds allotted for many citizens in the recently passed $2 trillion stimulus package, per CNN. Zelle has reportedly offered to help the US Treasury Department with the process, while PayPal and Square are said to have held early talks with the Treasury about their potential involvement.

Square Cash App Monthly Active Customers

It’s unknown if the federal government is truly interested in collaborating with the peer-to-peer (P2P) payments platforms — either alongside or instead of its plans to have the Internal Revenue Service (IRS) handle the payments — but doing so could help the government meet Treasury Secretary Steve Mnuchin’s aim of giving people their payments within three weeks.

Platforms like Cash App and Venmo may be able to reach more citizens at a faster pace than the IRS, but they’d face several obstacles that could slow them down.

  • P2P payments platforms are already structured to send payments to consumers, and they may be able to better reach the unbanked population than the IRS. While the IRS can make direct deposits into consumers’ registered bank accounts, the service may not be as focused on sending payments as Cash App, Venmo, and Zelle, which are all built on transferring funds. And not all consumers are set up to receive direct deposits from the IRS, including the 6% of the US population that is unbanked, meaning the IRS will need to send them checks, which may take longer and go to old or incorrect addresses. These platforms would mitigate this issue because people don’t need a bank account to receive payments on their platforms, which may make partnering with them appealing to the federal government.
  • But it may be difficult to develop a system to distribute payments fast enough to make these payments quickly. Square and PayPal are reportedly only beginning to look into the technical challenges handling these payments could pose, in addition to how the government might be able to share data with them. Considering the platforms would need to distribute payments to millions of people in just a few weeks — which vary in value based on factors like income and number of children — while navigating any restrictions on data sharing, it may not be possible to handle these payments. But they could start developing systems to distribute any additional stimulus payments that are needed as the coronavirus pandemic continues.

If one or several P2P platforms are able to send out stimulus payments for the US government, it would surely propel their adoption. While P2P payments are becoming increasingly popular — the number of monthly US P2P payment users is set to grow from an estimated 69.2 million monthly US users in 2019 to 83.4 million in 2023, per eMarketer — that’s still far less than the US’ population of over 329 million people.

Many of those people would likely start using a P2P app if it ensured they received their stimulus payment quickly, causing the platforms’ user bases, and potentially their payments volume, to skyrocket — especially if they gain older users, who have been slower to adopt P2P platforms.

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