Feds still push toward electronic payments

Almost all federal employees and more than three-quarters of Social Security recipients and veterans get paid electronically by the federal government, a Treasury Department official told Congress today.

Treasury assistant secretary Donald Hammond said the federal government is "proceeding very successfully" with complying with a 1996 law requiring the federal government to issue most of its payments via electronic funds transfer, rather than issuing paper checks. EFT deposits money directly into recipients' financial accounts, rather than producing paper checks that recipients have to cash or deposit on their own.

Ninety-seven percent of all federal salaries and more than 75 percent of all Social Security Administration and veterans' benefits payments are being made electronically, according to Hammond, testifying to the Subcommittee on General Oversight and Investigations of the House Committee on Banking and Financial Services.

But many federal payments—such as payments to federal vendors or supplemental security income payments—are still not being made electronically, Hammond said. Of the more than 860 million payments made by the Treasury in fiscal 1998, only 68 percent of payments, not including tax refunds, were made electronically.

The Debt Collection Improvement Act of 1996 mandated that by Jan. 1, 1999, government payments to federal employees, contractors and beneficiaries of federal programs, with the exception of tax refunds, be paid via electronic funds transfer instead of by paper checks. Rules adopted last year allow recipients of federal payments to choose not to have their payments made electronically, Hammond said.

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