Thursday, January 13, 2011

Treasury Gets in the Debit Card Business via Tax Refunds

Here we go, government debit cards.

The Treasury has today launched a pilot program to offer taxpayers a new account card option where there tax refunds can be deposited. The card, however, will do much more than act as a depoistory for tax refunds. It will provide ready tracking access by the government to those who use the card, who may in the past have avoided the banking system.

“This pilot program will provide low- and moderate-income Americans with a low-cost option for faster delivery of their federal tax refund,” said Deputy Secretary of the Treasury Neal Wolin. “This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures.”
The Treasury will mail letters next week to 600,000 low- and moderate-income individuals nationwide. The letters will invite these taxpayers to consider activating a MyAccountCard Visa® Prepaid Debit Card in time to have their 2010 federal tax refund direct deposited to the card.

The Visa ® branded MyAccountCard will be issued by Bonneville Bank, acting as Treasury’s financial agent.


  1. Why is a $34 million bank with one branch in Provo, Utah getting the gig?

  2. @PEU

    Good question. I noticed that also. I haven't been able to find the insider, but I know he's lurking somewhere.

  3. And why Visa over Mastercard or any of the other debit card providers?

  4. Bonneville bank is associated with Green Dot, the debit card company. The debit card is also the core competency of the Green Dot. If I was looking for an insider, I'd start there.

  5. Just a little libertarian paternalistic nudge; nevermind that it's probably authorized by neither statute nor the constitution.

  6. Bad things:

    (A) Depending on how it is setup, it gets the Treasury off the hook from debiting its accounts until the money is actually spent. In fractional reserve world, they may budget a lot less cash out of hand than they used to. That is bad enough to start, and only likely to be abused progressively more over time.

    (B) The USG will be tracking all the purchases. Using it for "consumer research" or whatever is bad enough, but I wonder what will happen to the taxes of any taxpayer that buys, say, gold or ammunition with it.

    (C) A hand out to the debit card companies, as above.

    (D) Pilot program now, but everyone can see the chance that--all in the name of program efficiency--this becomes the only way to get a refund.

  7. I think a lot of cc processors are in Provo. I think that's where Discover payments go anyway. Does that mean anything?

  8. A lot of banks are in Utah because of its favorable banking laws. It's not surprise that yet another bank is there.

    From businesswire. Notice that it specifically mentions Green Dot.

    Green Dot is the holding company of Bonneville because Bonneville gives it access to borrowing at the Fed Funds rate. Green Dot is known for its prepaid partnership with Walmart.

    The lobbyist firm I think is Pillsbury Winthrop Shaw Pittman. This is from 2009:

    Of interest the two contacts are Greg Laughlin, ex-Rep of Ron Paul's district, and Craig Saperstein, ex-aid to Kay Hagan. I haven't found lobbyists activity for 2010, yet.

  9. Eris Group also has Green Dot as a client, and this time the lobbyist activity has to be more serious than the 12000 they paid to Pillsbury.

    See client list:
    And here is the eris group lineup.

    I don't know if any of those names might be interesting.