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Modernizing federal payments- for TANs to be effective, they must be interoperable and based on open standards to ensure seamless collaboration between institutions and platforms while preserving consumer control

July 15, 2025 //  by Finnovate

In March, President Donald Trump ordered the government to shift away from paper checks toward digital channels. Amid the 248 responses, payment networks and several FinTechs weighed in on the ways and means by which the government might modernize its payment efforts. Visa responded by highlighting the capabilities of Visa Direct, which can move money in minutes to bank accounts and digital wallets, reach nearly any U.S. bank account efficiently, protect each transaction with tokenization and fraud prevention, and offer familiar experiences for cardholders. Visa also suggested using prepaid cards for the unbanked as a safer alternative to paper checks. Mastercard recommended leveraging and expanding existing mechanisms such as Direct Express, U.S. Debit, and Pay.gov to capture remaining check-based payments. Doing so will provide Treasury and its partner agencies with the clarity, certainty and security that are paramount to government payments. Forming public-private partnerships can help educate and move remaining users to digital forms of payment with trust and clarity. Trustly said that open banking removes cumbersome validation steps, reduces operational risks and errors, and enables more efficient pay-by-bank transactions with significant cost savings. Plaid said, “The government could take some cues from the private sector, wherein there can be a “default to digital” that would “offer digital payments as the norm, with opt-out options, rather than requiring citizens to opt in. It also advocated for the use of Tokenized Account Numbers (TANs), which replace sensitive data with revocable, app-specific tokens that protect users even if compromised. For TANs to be effective, they must be interoperable and based on open standards to ensure seamless collaboration between institutions and platforms while preserving consumer control.

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Category: Networks Processors & PSPs, Innovation Topics

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