A debit card you can bank on

The Treasury Department's Financial Management Service will introduce a prepaid debit card in the spring to deliver federal benefits to recipients who do not have bank accounts. The Direct Express card will provide a safer and more convenient alternative to paper checks for people who receive Social Security and other federal benefit payments, FMS Commissioner Judy Tillman said.

The initiative can give payment recipients who do not have bank accounts secure and easy access to their funds at low or no cost to them, she said. If every such federal check recipient signed up to use the card, it would save taxpayers about $44 million per year. Treasury will phase the debit card into national distribution by the end of the summer.

“We ultimately would like to see an all-electronic Treasury — with all the security, efficiency and cost savings that would entail,” Tillman said. “This card takes us closer to that goal by combining the best in payment innovation with sound public policy,” Tillman said in a Jan. 4 statement on.

Treasury estimates that 4 million Social Security and Supplemental Security Income check recipients do not have bank accounts, which can increase the risk of check delivery delays because of poor weather, national or local emergencies, and theft or loss. Nine times out of 10, problems with Social Security payments are linked to paper checks, not direct deposit, she said.

On the designated payment day each month, payments will be automatically deposited to the Direct Express card account. Cardholders will be able to access their money at ATMs and financial institutions nationwide. They will be able to use their cards to get cash back and make purchases at retail locations in addition to paying bills and making purchases online. The accounts are protected by a personal identification number. Comerica Bank, which already is a prepaid card issuer for millions of benefit recipients in state government programs, is the financial agent.

Treasury has increased electronic payments with its Go Direct campaign, which aims to encourage federal benefit recipients who have bank accounts to switch from paper checks to direct deposit. Go Direct has made more than 1.6 million direct-deposit conversions so far.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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