U.S. Bank Executive Discusses Plan for Payment Division Splits and Growth in Dogecoin Adoption
The Department of Government Efficiency (DOGE), an initiative of the Trump administration, has been making waves in the federal payments sector, particularly in its relationship with U.S. Bank. One of the two contractor banks providing payment services via the General Services Administration's (GSA) SmartPay program, U.S. Bank has found itself under the watchful eye of DOGE.
The SmartPay contracts awarded to U.S. Bank and Citi in August 2017 can run through November 2031, facilitating some $700 billion in credit card and related payment transactions. U.S. Bank's payments business generates about 25% of its revenue, making it a significant part of the bank's operations.
DOGE's efforts are likely to recommend the removal of regulations that may affect U.S. Bank's operations with the federal government. The details of how DOGE's efforts may affect U.S. Bank's relationship with the federal government remain unclear, but the installation of DOGE officials in the GSA, which manages the SmartPay program, gives the department extensive oversight and influence over federal payment systems like SmartPay.
This oversight means greater scrutiny and control over spending flows in SmartPay, affecting the bank’s operational environment. While the full extent of DOGE's control is marked by a culture of secrecy and has drawn scrutiny and audits from the Government Accountability Office, DOGE’s involvement means tighter controls and potentially reshaped or reduced federal payment contracts and program operations that affect vendors like U.S. Bank.
U.S. Bank's participation in operating SmartPay 3, a modernized version of the program, links it closely with federal payment modernization efforts under DOGE’s influence. Mark Runkel, the bank's chief transformation officer, will lead the merchant and institutional side of payments, while the consumer and small-business side of payments will be filled by an external hire. Shailesh Kotwal, the bank's vice chair of payment services, will retire in the first half of 2025.
Andy Cecere, CEO of U.S. Bank, views DOGE's pursuit as an opportunity to increase efficiencies around payment flows and payments via electronic methods. U.S. Bank is the largest provider of commercial card payments to the U.S. government, according to its annual report issued in February. The bank's payments business will be separated into two segments: merchant and institutional payments, and consumer and small-business payments. Runkel will take his new post in January and report to the bank's president, Gunjan Kedia.
The U.S. Bank spokesperson declined to comment on the terms of the SmartPay contract. Despite the uncertainties, U.S. Bank, as a key player in the federal payments sector, continues to navigate the challenges posed by DOGE's oversight and reform efforts.
- The Department of Government Efficiency's (DOGE) efforts are likely to affect U.S. Bank's finance sector, as tighter controls and potentially reshaped or reduced federal payment contracts may impact the bank's revenue from its payments business, which generates about 25% of its total income.
- U.S. Bank's operations in the business sector, particularly within the federal payments sector, are under close scrutiny due to DOGE's oversight and reform efforts, as the department has extensive influence over federal payment systems like SmartPay, where U.S. Bank participates in operating SmartPay 3.
