Treasury Notes

 Treasury Makes 98 Percent of Monthly Benefit Payments via Safe, Reliable Electronic Channels.

By: David A. Lebryk

Each year, the Treasury Department disburses billions of payments, including payments to federal benefit recipients.  Millions of Americans rely on these payments, often for the most basic of needs like housing, food, and medical expenses.  In the past, the paper processes associated with these transactions could be slow, unsecure, and expensive.  In an effort to better serve taxpayers and beneficiaries, Treasury launched an “all-electronic” initiative in 2010, pursuant to an act of Congress (Public Law 104-134).  The all-electronic initiative will save taxpayers approximately $1 billion over a 10-year period.

Under this initiative, the Treasury has moved millions of federal benefit payments, including Social Security and Veterans payments, away from paper checks to more cost effective, secure, and convenient electronic options.  Today Treasury is making 98 percent of monthly federal benefit payments elec​tronically, the vast majority choosing direct deposit.  This translates into real cost savings.  For every paper check that is converted to an electronic payment, the American taxpayer saves about $1.  

Equally important is the fact that electronic payments provide beneficiaries with a safer, more reliable, and convenient way to receive their payments.  While paper checks can be lost, stolen, or delayed, electronic deposits eliminate these risks.  Further, electronic payments are reliable, even in severe weather.  Beneficiaries will get the funds they rely on – even if there is a blizzard, hurricane, or tornado.  Electronic payments are also more convenient.  A beneficiary does not need to make a special trip to the bank or credit union to deposit a benefits check or find a place to cash the check and carry large sums of cash at any given time. 

Essential to the success of the all-electronic effort has been the availability of the Direct Express® card, which has provided an alternative for millions of un-banked and under-banked federal benefit recipients to receive their monthly payments safely and securely each month on the card with minimal fees.  The Direct Express® card enables cardholders to make purchases, pay bills, and get cash at thousands of ATMs and retail locations without having to pay a check-cashing fee, which can be 3 percent or more of the total check amount. 

Since Treasury began surveying cardholders in 2009, the Direct Express® program has maintained very high customer satisfaction ratings of 94 percent or above.  Over five million benefit recipients have enrolled for the Direct Express® card.  This includes a significant percentage of Supplemental Security Income and Social Security recipients who rely on these funds to pay for rent and other basic living expenses.  Providing continuity of lifeline payments for millions of cardholders without disruption is an important activity of the Treasury.  

Under a new five-year agreement with Treasury to administer the Direct Express card, Comerica Bank will implement several new innovative benefits and features, including an expanded ATM network and reduced fees, a low fee cash-out option, emergency cash availability, and enhanced mobile account application.

The all electronic effort has been a tremendous success.   Recipients of payments are receiving their payments more safely, securely, and reliably, and the government is making payments more efficiently and at much less cost to taxpayers.  We will continue to look for more ways to move from paper-based processes to electronic transactions that are inherently more efficient and cost effective.  Identifying and realizing these improvements are a win-win for all of us. 

David A. Lebryk is the Fiscal Assistant Secretary of the U.S. Department of the Treasury

Posted in:  Bureau of Fiscal Service
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