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Some Seniors May Soon Get Their Social Security Benefits
in Prepaid Debit Card

Treasury to Introduce Direct Express Cards for Those without Bank Accounts
In January, Social Security Administration announced Senior citizens who do not have bank accounts may soon be getting their Social Security payment with a prepaid debit card. The Department of Treasury says the new Direct Express cards will provide a safer and more convenient alternative to paper checks.

The Treasury's Financial Management Service (FMS) has designated Comerica Bank as its financial agent in a new initiative to offer the option of using a prepaid debit card for receiving Social Security and other federal benefit payments. Comerica Bank, Dallas, was selected, in part, because of its experience as a prepaid card issuer for millions of benefit recipients, particularly for state government programs.

The Treasury estimates that four million Social Security and Supplemental Security Income (SSI) check recipients do not have bank accounts, placing them at greater risk of check delivery delays due to poor weather, national or local emergencies, and other check related problems, such as lost or stolen checks. In fact, nine times out of ten, problems with Social Security payments are linked to paper checks, not direct deposit.

Financial Flexibility and Security
The Direct Express card will be introduced in spring 2008 in some states and will be phased into national distribution by the end of the summer. Direct Express card holders will benefit from improved financial flexibility and security as compared to paper check recipients.

Each month, payments will be automatically deposited on the Direct Express card account on the federal beneficiary's designated payment day -- which means people will have faster access to their money than they would if they had to cash a paper check.

Card holders will be able to access their money at ATMs and financial institutions nationwide. They will be able to use their card to get cash back and make purchases at retail locations, as well as pay bills and make purchases online. In addition, these accounts are PIN-protected, FDIC-insured, and subject to federal consumer protection regulations (Regulation E).

"Direct Express represents a significant step forward in the evolution of federal benefit payments," said FMS Commissioner Judy Tillman.

"The explosive growth in the prepaid card industry offers an important opportunity for Treasury to give unbanked payment recipients secure, easy access to their funds, at low or no cost to the cardholder.

“We ultimately would like to see an all-electronic Treasury -- with all the security, efficiency and cost savings that would entail. This card takes us closer to that goal by combining the best in payment innovation with sound public policy. If every unbanked federal check recipient signed up to use the card, it would save taxpayers about $44 million per year."

"Millions of federal beneficiaries remain outside the banking system, which means they don't have access to payment methods that most Americans take for granted, such as getting cash at an ATM or paying with a card at a store," said Nora Arpin, Director of Government Electronic Solutions for Comerica Bank. "The Direct Express card provides an opportunity for people outside of the banking system, either because of personal choice or perhaps their inability to obtain a bank account, to gain a foothold in the financial mainstream."

The Treasury has already experienced significant success in increasing electronic payments with its Go Direct campaign, which is aimed at motivating banked federal benefit recipients to switch from paper checks to direct deposit. To date, Go Direct has achieved more than 1.6 million direct deposit conversions.

The Wall Street Journal reports this is how the card will work:

• Cardholders will get one free ATM cash withdrawal per deposit per month, but Comerica will charge 90 cents for each additional withdrawal.
• Users may also face surcharges at many ATMs. Other fees include $3 for international ATM withdrawals, 3% on international currency exchanges, 50 cents for each online bill payment and 75 cents per month for paper statements.
• Cardholders can avoid surcharges at more than 56,000 designated ATMs, including those run by 7-Eleven and PNC Bank.
• ATM balance inquiries and cash withdrawals at a teller window will be free, and there will be no fees for overdrafts, declined transactions, or inactivity.
• Cardholders can opt to receive free deposit notifications or low-balance alerts via text message, email or automated phone call.
• The debit card should mean cost savings for many Social Security recipients who don't have a bank account and who use check-cashing services to cash their benefits checks, banking experts say.

"Direct Express" is a registered trademark of the U.S. Department of the Treasury, Financial Management Service.

Thanks for sharing this Ray.  This is wonderful news that will help many people.

A good conversation piece to use with our elders.  Thanks,