U.S. Disaster Relief Payments: Dangerously in Need of Innovation, and Fast
FPC Digital Assets Work Group
Overview When disasters such as hurricanes, wildfires, pandemics or floods strike, timely financial aid is critical for survivors. However, in the United States, disaster relief payment systems — both public and private sector — are often slow, inefficient, and burdened by outdated processes. Survivors typically receive an initial small disbursement, but subsequent funds can take weeks, months, or even years to arrive. This delay results from reliance on legacy systems requiring multiple levels of verification, paper checks, ACH transfers, restrictive pre-paid cards, and inadequate identity verification that enables fraud.[1]These inefficiencies leave people without shelter, medical care, or necessities, while fraud and misallocation erode trust and waste resources. The over 14 percent of U.S. households (approximately 19 million), or 48-60 million individuals[2]who are underbanked, are disproportionately underserved, often receiving aid last, if at all.[3] The need for modernization is urgent.
This report explores how digital assets, digital wallets, digital IDs, stablecoins, and distributed ledger technology (DLT), commonly known as blockchain, can transform disaster relief payments and, drawing on global best practices, proposes actionable recommendations. The Current State of U.S. Disaster Relief Payments Distributing disaster relief funds in the United States is a complex challenge, worsened by disrupted infrastructure and bureaucratic inefficiencies. Disasters often impair physical and digital infrastructure complicating financial transactions and logistical efforts, particularly in rural areas, which comprise 70 percent of all U.S. counties, and lack robust backup infrastructure. Government aid must navigate federal, state, and local layers, while nongovernmental organizations (NGOs) and private foundations operate with disconnected and siloed processes, all of which limit coordination. Significant delays arise from efforts to avoid duplication of benefits while FEMA may withhold large payments pending insurance assessments. Nonprofits similarly hesitate as they struggle to coordinate with other donors, leaving survivors waiting for extended periods, sometimes up to seven years for long-term recovery. The absence of shared information across funders is a key cause of these delays.
Traditional delivery methods, such as checks and ACH transfers, are ill-equipped for a coordinated approach and rapid response, particularly for the un/underbanked. Gift cards, another common tool, are often store-specific and prone to theft. Fraud prevention measures in place today rely on rigid, outdated verification processes, allowing fraudsters to siphon 20 percent or more[4] of available funds in some cases. This fragmented, slow system undermines disaster resilience, especially for vulnerable populations in disaster-prone and rural regions. The Potential of Digital Ledger Technology DLT, including tokenized deposits, tokenized real-world assets, stablecoins, and cryptocurrencies — paired with digital wallets, digital IDs, and blockchain technology — offer transformative solutions for disaster relief. These tools enable rapid, secure, and transparent transactions. Internationally, these technologies are already in use, providing valuable lessons for the United States.
Global best practices for disaster relief payments center around DLT and offer key lessons and benefits for the United States as detailed below. Efficient, transparent, and accountable aid tracking is a cornerstone of DLT’s value, providing a transparent distributed and shareable ledger for tracking funds from donation to distribution to disaster survivors in real time. Features include:
Smart contracts streamline disaster financial aid by automating fund releases across federal, state, local governments, foundations, and NGOs once predefined conditions are met (e.g., damage assessments, emergency declarations, verified aid requests, as examples), reducing bureaucratic delays and ensuring rapid, accountable disbursement. Example: Esther[5] works with non-profits and government to enable capture and verify aid requests, and report on how funds are spent.
A shared distributed ledger enhances coordination by providing a single, transparent source of truth for tracking funds and aid distribution across multiple funders, preventing duplication of benefits, simplifying audit, and fostering seamless collaboration, while protecting survivor privacy. Example: SKUx[6]uses DLT to track payment transactions securely, for tamper-proof record keeping. This provides end-to-end payment visibility, logging all payments on an immutable distributed ledger. Fraud detection and reduction is another critical advantage, as immutable records ensure funds are used for intended purposes. Blockchain records make every transaction easily auditable, minimizing spend outside of funders’ intended use. The immutable blockchain ledgers offer a tamper-proof record of disbursements and expenditures, enabling real-time tracking. This could help coordinate across funders to avoid duplication of benefits and speed aid. Survivor privacy concerns can be addressed and protected using tokenized identities.
Offline resilience and backup systemsensure continuous service during outages, a vital feature in disaster scenarios. Solar-powered wallets or smartphones maintain access to digital assets, while paper wallets with QR codes serve as backups for funds and identity credentials when electronic devices fail. Edge computing allows transactions to be processed locally and synchronized with the blockchain later. Mobile or PC cloud backups, on-chain and off-chain digital asset records, or portable thumb drives enable data restoration onto new or repaired devices. In areas without internet access, mesh networks using Bluetooth or Wi-Fi Direct create local networks for crypto and traditional financial transactions, while preloaded smart cards (e.g., NFC-enabled and linked to wallets including crypto wallets) store value for offline spending. Cold wallets securely store and use digital assets without live networks while digital asset vouchers allow offline transfers to merchants and contractors with guaranteed deferred settlement when connectivity returns.
Identity verification is enhanced and secured through blockchain-based digital IDs. Digital wallets are integrated with IDs streamline aid distribution. Progress in digital IDs evident in U.S. states like CA, NM, AZ, CO, MD, OH[7]and Utah.[8]The ID2020 Alliance (id2020.org) has used blockchain-based IDs to help refugees and disaster survivors access aid and services securely and transparently. Digital wallets also enable direct aid distribution, bypassing traditional banking delays, especially for the un/underbanked. International Best Practices The following are examples of international best practices for disaster relief payments:
Stablecoins like USDC or PYUSD can be sent to wallets for purchasing essentials, as demonstrated by the World Food Programme.[9]In war zones such as Ukraine, the United Nations High Commissioner for Refugees (UNHCR) implemented a pilot project with the International Rescue Committee (IRC) using blockchain to disburse cash assistance to displaced individuals rapidly and securely.
Blockchain provides for expanded financing sources. Tokenized crowdfunding allows relief organizations or communities to raise funds globally using tokenized assets or NFTs. Blockchain microloans, digital asset line-of-credit tokens (equivalent to cash distribution but repaid as credit), and digital asset loans (funded and repayable as digital cash) offer flexible financing. Kiva[10]offers wallets that enable peer-to-peer loans to small businesses, accelerating rebuilding efforts.
In zones with little or no connectivity, including in conflict zones, Payala[11]enables real time transactions with card-to-card communications of value held during internet outage. When cardholders return to a site with internet, data is uploaded and downloaded, and funds are settled.
Beyond direct financial support, aid such as food vouchers is also enhanced through blockchain. In Syria, the WFP’s Building Blocks Project[12]utilized blockchain to deliver food assistance to refugees, creating a secure, efficient system that reduces intermediaries, costs, and fraud while speeding delivery and preserving recipient dignity by offering greater control over resources. Example: in Aruba and Sint Maarten RedRose[13]deployed a unified, survivor-focused platform enabling seamless, rapid, and dignified digital aid delivery—from registration to payout—with embedded user choice and communication through feedback to donors and field teams.
Blockchain enables expanded and improved engagement and coordination among donors worldwide which strengthens disaster aid efforts. The Ukrainian crisis drew individuals globally who contributed $225 million in cryptocurrencies and $190,000 in Ethereum-based NFTs to the government through platforms like Ukraine’s official crypto wallet and Binance Charity. NFT-based campaigns, such as Ukraine DAO[14], raised millions for humanitarian efforts. Meanwhile, improved transparency in reporting to donors, as in the case of Uganda, leverages digital assets to provide aggregated, anonymized data on fund usage, proving “the money matched the mission”[15]and boosting donor trust.
Some Current Solutions Operating in the Disaster and Aid Space in the United States As part of the California (CA) Wildfire Relief efforts, [16]GiveCard embedded its disbursement technology into Electronic Benefits Transaction (EBT) apps and worked with[17]GiveDirectlyto provide instant payment options via both the RTP® Network, FedNow® Service, and virtual Visa® cards provisioned into digital wallets of disaster victims. Further in response to the CA Fires, similar to the response to fires in the U.K. and Spain, governments and aid organizations leverage Pin4[18]to send real-time cash assistance, combining the speed of digital transfers with the utility of cash, including to the un/underbanked. Impacted people are sent a QR code to their phone, or they can be handed a paper check to take to an ATM (30K in the United States) or present to an Emergency Operations Center to scan, validate and accept cash.
Obstacles to Adoption in the United States Despite its proven benefits, the United States lags in adopting digital assets and DLT, or blockchain, for disaster relief due to several barriers. Large federal agencies too often rely on slow outdated payment systems and paper-based verification, resulting in severe delays. Funds must travel from the federal government to states and then sometimes counties where understaffing and outdated infrastructure exacerbate inefficiencies. The fragmented relief ecosystem, spanning government, NGOs, and corporate foundations, lacks a shared coordinated framework, leading to inconsistent communication and bottlenecks. Unlike countries with national payment directories or widespread DLT payment adoption, the United States has limited digital payment infrastructure in government and nonprofit sectors.
In the United States, concerns over financial stability and consumer protection also hinder adoption of blockchain, though other nations have demonstrated these to be manageable risks. The underbanked population faces additional barriers with reduced access to internet and smart mobile devices. The absence of pre-stored, verified digital records for real-world assets (e.g., property, appliances) slows insurance and government agency claims, a gap DLT could address by previously securely tokenizing assets for rapid filing.[19]Infrastructure damage, digital literacy gaps, and regulatory challenges further complicate adoption of DLT or blockchain, though guardrails currently under development by policy makers and education campaigns could mitigate these challenges. Recommendations for Modernization To leverage DLT, the United States must act decisively. This paper recommends establishing a public-private collaboration (PPC) team of disaster, insurance, government, and fintech experts to develop a roadmap for short, medium, and long-term action. Short-term efforts could focus on low-cost solutions like digital wallets for last-mile delivery, while long-term initiatives might integrate DLT across federal and state government systems. According to the 2024 Resiliency Study[20], every $1.00 spent on preparedness yields $13.00 in recovery savings, underscoring the value of initiative-taking investment.
Given federal uncertainties, as part of this PPC, states should lead by encouraging digital IDs and tokenized asset records for citizens and by partnering with community banks and fintechs to be prepared to deliver funds in minutes. This is especially important in delivery of funds to the underbanked. With this preparedness, funds can be delivered across all disaster phases, before hardening of homes, during for evacuation support, and after for short-term shelter, and for long-term rebuild and recovery. Regional and ideally National collaboration is critical to avoid isolated efforts that perpetuate “silos of excellence” and information-sharing gaps. These innovations could reduce disaster impacts, delivering funds “fast, safe, and with dignity” to the right people, at the right time, for the right purpose.[21]
Conclusion The U.S. disaster relief payment system is trapped in inefficiency, but digital assets and DLT, or blockchain, offer a path forward. Global examples of success are outlined above, as are several already operating in the United States. These demonstrate fintech and blockchain’s potential to enhance speed, coordination, security, and transparency. These unique capabilities match the federal government’s focus on efficiency, and controlling for waste, fraud, and abuse, while providing an immutable record of all money movement for audit and data analytics. By adopting these proven tools, the United States can build disaster financial resilience, reduce costs, and accelerate recovery for people, businesses, and communities. With the increasing impacts of disaster, and the federal government disaster program aid in flux, now is the time for states and public and private sector stakeholders to apply existing proven financial technology solutions, ensuring aid reaches those in need without delay. It is time for collaboration across experts and directly with the federal government through its current efforts via the FEMA Council of 20 to overhaul disaster relief efforts here in the United States.[22]Industry experts look forward to the opportunity to engage in discussions with the FEMA Council to drive efficiency and control for waste, fraud, and abuse in the disaster payments arena.
Acknowledgements
Digital Assets in the Financial Industry Work Group
Thank you to the members of the FPC Digital Assets Work Group (DAWG) who contributed to this blog.
Digital Assets Work Group Leadership Avenue B Consulting, Inc. Bo Berg, Work Group Chair
BNY Kevin Barr, Work Group Vice Chair Avenue B Consulting, Inc. Maria Arminio, Work Group Facilitator Digital Assets Subgroup Blog Contributors Payments as a Lifeline Kirsten Trusko, Subgroup Lead Nacha Mark Dixon Strategic Resource Management Inc. (SRM) Larry Pruss Treasury Solutions Info Tech LLC Patricia Gallagher Vments, Inc. Steve Wasserman
Digital Assets Overall Work Group Contributors 1st Source BankAlison Tusing AFM Consulting LLCAaron McPherson
Aptos Labs Alex Heuer
Associate Member Bron Gary Bates Group LLCBrandi Reynolds BNY Eric Peterson Metallicus Frank Mazza Nickel Shine LLC Michael Curry PTap Advisory, LLC Peter Tapling Ripple Labs James Sellick Serio Payments Consulting Anthony Serio, Editorial Review
The Payments Plug Jon Shepeard About the Digital Assets in the Financial Industry Work Group
Maps out how digital assets relate to the financial industry, focusing specifically on payments made with digital funds – central bank digital currency (CBDC), regulated liabilities, and stablecoin.
About the U.S. Faster Payments Council
The U.S. Faster Payments Council (FPC) is an industry-led membership organization whose vision is a world-class payment system where Americans can safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability. By design, the FPC encourages a diverse range of perspectives and is open to all stakeholders in the U.S. payment system. Guided by principles of fairness, inclusiveness, flexibility, and transparency, the FPC uses collaborative, problem-solving approaches to resolve the issues that are inhibiting broad faster payments adoption in this country.