Feds to market electronic benefits payments

The government is preparing a multimillion-dollar campaign to persuade more citizens to accept electronic payments for benefits such as Social Security.

The federal government is preparing a multimillion-dollar research and marketing campaign to persuade more citizens to accept electronic benefit payments, a Treasury Department spokeswoman said this week.

Issuing and mailing paper checks costs the government about 62 cents each, said Alvina McHale, public affairs director for Treasury's Financial Management Service. But the primary purpose of the campaign is to show that electronic payments are more reliable.

"Yes, it's a matter of saving money for the government," McHale said. But just as important, she said, is "the safety, reliability and security of electronic payments."

The possibility of disruptions in transportation is only one factor, but it is an important one. Sept. 11, 2001, "was a major wakeup call to us," McHale said. Immediately after the terrorist attacks, planes were grounded and checks couldn't be delivered in the usual manner, she said.

The federal government has hired Wirthlin Worldwide, a research company, and Weber Shandwick, a public-relations agency, to handle what McHale said could be a multimillion-dollar research and marketing effort. Government officials expect the savings from eliminating check payments to be much greater than the cost of the campaign. At 62 cents each, the government's check costs last year amounted to $151.9 million.

The Financial Management Service, the Social Security Administration and the Federal Reserve are sponsoring the campaign, which will begin by looking into why some beneficiaries are reluctant to switch to direct deposit for receiving Social Security checks and other benefit payments.

"Our goal is to understand better as a result of this research why people want checks, and why they stay in the check world," McHale said. That information, she said, would be used "to help move people to the electronic world, which is a far safer place."

The Financial Management Service makes nearly 1 billion payments a year, which include vendor payments, tax refunds and Social Security benefits. About 74 percent of those payments are made through electronic funds transfers.

For the remaining payments, the agency issues checks. Last year, FMS officials issued 245 million checks. "We've made good progress in the last few years in terms of moving people to electronic" payments, McHale said. "But we've got to close that gap."

The campaign will look first at Social Security and Supplemental Security Income benefits "because those are the folks who represent the lion's share of the benefit payments," McHale said.

In the absence of any effort on the government's part, direct-deposit payments have been increasing by only 1 percent each year, McHale said. "We'd like to build on the progress that we've made with the Social Security population and get on top of it before the baby boomers move into the mix."

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