This post originally appeared on PaymentsJournal.com
Technology advances in financial services continue to soar to new heights. They are a social utility and are creating new frontiers that impact sending, receiving and managing monetary transactions of all types. The user experience in payment transactions has greatly improved in functionality, design, and number of services. One of the things driving these advances is the preference of today’s consumers, in particular millennials, for digital. Most millennials have experienced peer-to-peer, mobile, and remote digital transactions. The process is instant and provides a great deal of value to customers seeking speed, convenience, security, and a seamless experience. So, it is no surprise consumers are quickly moving away from the traditional ways of doing things, including how they file their taxes and get their refund. An example of this is the rise in the use of paycards (also known as payroll cards) to receive tax refunds along with other emerging technologies that are pushing to make the entire tax experience digital.
With tax season around the corner, how do these factors impact receiving tax refunds?
Accountants and tax preparation companies have adopted technology advances and improved customer experience in not only filing tax returns but also receiving refunds. Although the traditional process of how taxpayers file returns and receive refunds are still available, tax preparation services have been quickly transformed, again in large part because of consumers’ digital preference. Large tax preparation companies have experienced drastic decreases in in-person tax return services, and massive increases in digital W2 document uploads, requiring them to change their business model. This digitized tax return process accepts employee W2 forms, and other IRS required materials to be submitted and uploaded to digital portals quickly and easily, even from a mobile device. As it relates to receiving their tax refunds, consumers now can opt for a safer and faster way than getting a paper check in the mail. Consumers with paycards can have their refund direct deposited to their card which shortens the refund time from weeks to days. With many consumers relying on their refund check to “catch up” on bills getting their money faster is critical to their financial well-being.
How can paycards and the push to make taxes digital improve consumer financial wellness?
Besides being a faster and safer option to receive a tax refund, paycards also provide numerous other benefits that can help consumers better manage their money and improve their financial wellness. Cardholders can take advantage of paycard benefits and technology features such as instant access to earned wages, online bill pay, mobile check deposit, no fee ATM withdrawals and transaction alerts, to name a few. These features can save cardholders more money over time as they can help them budget and avoid late charges, penalties, and other fees. With the average tax refund last year totaling about $3,000 we aren’t talking about small change.
Additionally, emerging technologies are allowing taxpayers to get access to tax information in real-time. With this push to make taxes digital, taxpayers will no longer have to wait until the end of the year to know how much taxes they owe. Instead, this will be done immediately to help increase efficiency, improve financial management, and minimize errors.
I believe consumers who collaboratively take advantage of paycard benefits, and tax filing technology features will be able to forecast and create a budget in advance of receiving their tax refund. These digital technology advances will help consumers better manage their money and open up more opportunity for consumers to work on personal projects, as opposed to emptying out their account the second their tax refund is deposited onto their paycard.
In conclusion, it’s apparent that technology advances show no signs of slowing down. The ways we send and receive payments of all types is transforming with consumers’ growing preference for digital. Gone are the days when a customer has to be physically in front of their accounting specialist during tax return season or at a bank depositing their tax refund check. Advanced tax filing and payment technologies offer greater financial management capabilities and can substantially improve a consumer’s financial wellness. With the increase in millennials’ knowledge of the importance of managing finances and their understanding of the value a paycard brings to their daily financial lives, it will not be long before millennials, who have embraced these digital improvements, will reap the benefits. Such technology advances make a genuine contribution to a consumer’s desire to live within their means and are a real benefit to their financial health.