A Playbook for Improving Unemployment Insurance Delivery



Payment Methods

In order to provide accessible unemployment benefits, it’s important to provide payment options that:

  • Work for unbanked and underbanked claimants
  • Include digital options

Provide payment method options that work for unbanked and underbanked claimants.

To make benefits accessible, states need to offer multiple ways for people to receive their payments. States should have multiple payment method options, and allow claimants to choose the one that works best for them.1 Our research suggests that many states currently have the flexibility to leverage digital payment options, which speed up payment delivery times and are more accessible to the underbanked and unbanked.

Every unemployment system should have an option for the unbanked2 or underbanked 3 to receive payment in a timely manner.4

Unemployment was the third-highest provider of prepaid debit cards in 2019, after SNAP and SSA. Debit cards carry lower administrative fees for recipients and administering programs.5 But debit cards don’t work for everyone.

Mailing unemployment benefits as a check could be an option for claimants to choose, but shouldn’t be a default. For the unbanked, cashing an unemployment check could cost upwards of $110.6

Vet promising new digital payment methods carefully.

Before you use a new digital payment distributor, be sure to note limitations like daily payment maximums. And require all distributors to provide a customer service function.7

Lesson from the field

Michigan piloted delivering benefits payments via Cash App, in response to requests from claimants. Claimants could get payments instantly and didn’t need bank accounts. However, the state learned that the app has a payment maximum, which some claimants exceeded due to the accumulation of back-pay. Because Cash App doesn’t have a customer service center, those large payments were stuck in limbo.

Don’t allow payment vendors to set additional restrictions.

Some states reported that their payment vendors took paternalistic steps beyond those required by the contract.8 For example, one state shared that their payment vendor blocked recipients who used a prepaid debit card at a casino, even though they may simply have used it there to buy lunch. The same vendor also blocked those who withdrew large amounts of cash at once, which is sometimes necessary to cover back-pay or other large, urgent expenses.

As part of your agreement with vendors, prohibit them from adding their own restrictions to what recipients can spend unemployment benefits on.

Have a plan for replacing stolen or lost benefits.

For every payment method, you’ll need a clear plan for how recipients can receive a secure replacement for a lost or stolen payment.

Don’t require claimants to wait for a mailed debit card.

Many people we spoke with reported that they felt vendors were slow to mail out debit cards. Because shipping costs aren’t included in payment vendor contracts, the banks had no motivation to rush or overnight replacement cards — a standard practice for traditional credit card customers.

Recommendation for the federal government

Consider using demonstration projects to explore options like:

  • Issuing temporary payments via Western Union, like it’s possible to do with SSDI
  • Pushing a replacement payment to a digital wallet
  • Guidelines for new kinds of payment vendors
  • Determining how to measure if payment providers are effective


We did not collect any overpayments success stories from states or partners, but would love to hear them.


Payment timeliness causes tremendous stress among unemployment beneficiaries. Even “timely” payments — which most states struggle to meet in non-pandemic times — allow for 3 weeks between application submission and first payment. And this 3-week window doesn’t include the time it can take for a payment method like a debit card to be delivered.

“Recipients surveyed by Propel reported that P-EBT helped them keep food on the table as they waited to receive Unemployment Insurance (UI). The UI systems in many states were overwhelmed by the scale of job loss during the pandemic, and it often took weeks for the checks to arrive.”9 — The New America Foundation

U.S. DOL provides guidance on expectations for timely payments.

CFR (Code of Federal Regulations) 640.3, interpretation of section 303(a)(1) of the Social Security Act: require states to determine eligibility and make payments “with the greatest promptness that is administratively feasible.”10

Also, states must continue to pay claimants if there is a question of their ongoing eligibility and the state isn’t able to resolve it in a timely manner.11 “If the state agency cannot make an eligibility determination before the date of a timely payment, the state agency “presumes the claimant’s continued eligibility until it makes a determination otherwise.”12” We found many states were not adhering to this rule, to the detriment of claimants.

Other benefits lines, like SNAP, show that it’s possible to provide same-day benefits.

“In some cases, clients are now able to receive benefits on the same day they apply…The most dramatic and consistent changes were in the percentage of applications processed on the same day they were received… The percentage of same-day SNAP applications processed in Rhode Island increased from 10 percent in mid-2011 to 30 percent in early 2015. In Colorado, this number more than doubled, from 15 percent in winter 2013 to 32 percent in summer 2015. Illinois also saw notable improvement in same-day service, from 13 percent in 2012 to 21 percent in 2015. Idaho already provided same-day service to 71 percent of SNAP applicants before WSS but saw a small increase to 72 percent by the end of the initiative.”13

Recommendations for the federal government

We recommend a demonstration project and success metric of same-day benefits payments to as many unemployment applicants as possible. As demonstrated across other benefit areas, it is administratively feasible for states to make same-day payments. Same-day payments will drive increased automation and the streamlining of policy.

In determining timeliness measures, we recommend that U.S. DOL include a more expansive group of claimants. Today, if you’re disqualified prior to the first payment timeliness marker, you don’t appear in the timeliness metric. Visibility into the percentage of disqualified claimants over time can surface potential discrepancies or inconsistencies with state policies.

The demonstration pilot would have to address and work through the risk of overpayments, which may be addressed by improved, real-time wage data instead of waiting until after someone applies for unemployment to pursue verification with an employer. Policy changes are also likely needed to address states where the first week of unemployment isn’t compensable.

Once there’s a new definition of timeliness — informed by the demonstration project — we recommend that U.S. DOL make new technology grants contingent on meeting this new definition.

Go to the next section: Claim Processing


  1. Some states are actually fining restaurants that don’t offer multiple payment options: https://www.cnbc.com/2018/12/13/nyc-nj-target-cashless-businesses-alleging-bias-against-the-poor.html 

  2. Around 1 in 9 New Yorkers do not have bank accounts https://www.nbcnewyork.com/news/coronavirus/very-hard-to-get-by-how-the-pandemic-has-affected-unbanked-new-yorkers/2959385/ 

  3. McKinsey 2017 nearly half of Black households are underbanked or unbanked link: “Banks in black neighborhoods require customers to deposit an average of 60 percent of their paychecks to avoid fees or account closures, compared with just 28 percent in white neighborhoods—a consequence of both higher bank fees and lower incomes.15 As a result, many black households rely on alternative financial services, such as check-cashing services, payday loans, money orders, and prepaid credit cards, all of which typically charge high fees. Over the course of a financial life, those fees can add up to an estimated $40,000.16 These obstacles and the distrust they engender make even the simplest transactions a challenge for black families.” 

  4. “According to a 2017 survey by the Federal Deposit Insurance Corporation, 25 percent of U.S. households are unbanked or underbanked, meaning that they don’t have bank accounts nor access to banking services.” (link

  5. “Ten benefit programs carried $136.2 billion in prepaid loads during 2019, but only incurred $152.7 million in costs among all government distribution channels.” Mercator Advisory Group, December 2020. This amount is overwhelmingly ATM fees. 

  6. https://danachisnell.com/wp-content/uploads/2020/08/Report_-Barriers-pain-points.pdf 

  7. https://www.newamerica.org/pit/reports/establishing-emergency-cash-assistance-funds/delivering-cash/ 

  8. Banks are given files from states to deliver unemployment benefits, so banks are not performing KYC (Know Your Customer) as they would in normal circumstances. 

  9. https://www.newamerica.org/pit/reports/it-has-meant-everything-how-p-ebt-helped-families-in-michigan/successes/ 

  10. https://wdr.doleta.gov/directives/attach/UIPL/UIPL_16-21.pdf 

  11. https://wdr.doleta.gov/directives/attach/UIPL4-01.cfm 

  12. https://wdr.doleta.gov/directives/attach/UIPL/UIPL_01-16.pdf 

  13. https://www.urban.org/research/publication/findings-work-support-strategies-evaluation-streamlining-access-strengthening-families 


Supported by

The Families & Workers Fund