Monday, January 07, 2008

New Social Security Debit Card

The Wall Street Journal reported on January 4, 2007, in an article entitled "Treasury Plans Social Security Debit Card", by Eleanor Laise, that "[t]he Treasury Department plans to introduce a prepaid debit card for Social Security recipients in an effort to provide safer and cheaper benefits payments."

On January 3, 2007, the U. S. Treasury Department, through its Financial Management Services Program, had announced & explained the initiative its "Overview -- Direct Express Card", updated that day on the web regarding the "new" card planned:
In the Spring 2008, the Financial Management Service (FMS) will be offering the Direct Express card through a new financial institution. The new Direct Express card will have more features and lower fees. In the Spring, cardholders will receive information about the new program, its features and fees, and how to sign up. * * *

People who receive Social Security payments can now enjoy the benefits of receiving them electronically even if they don't have a bank account. The Direct Express Card offers a safer, easier way for people to get their benefits.

With a Direct Express Card, Social Security beneficiaries receive their payment every month without having to worry about cashing a check, losing a check, or having it stolen.

The Direct Express Card can be used 24 hours a day, 7 days a week, to get cash at automated teller machines (ATMs) and make purchases and buy money orders anywhere MasterCard debit cards are accepted. Cardholders may also get cash back at many retail locations when the Direct Express Card is used to make purchases. * * *

The Wall Street Journal article reported about the expanded card services:
The Direct Express debit card, set to be announced today, will be introduced in a handful of states this spring and rolled out nationwide by the end of the summer.

Dallas-based Comerica Inc.'s Comerica Bank has been selected as the card issuer for the program, which is targeted at Social Security and Supplemental Security Income recipients who don't have a bank account.

The card could mean significant cost savings for benefits recipients as well as the federal government, Treasury officials and banking experts say. People who sign up for the card will also gain faster access to their money and avoid some security problems, like stolen checks.

But there are some cardholder fees associated with Direct Express, and a significant education effort may be required to get users to accept and understand the card.

The debit card is part of a broader effort by the Treasury to move to electronic payments. In 2005, the department started its Go Direct campaign, which is designed to encourage benefits recipients with bank accounts to switch to direct deposit. * * *

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. * * *

The debit cards should be more secure than paper checks, the Treasury and banking experts say. In 58,000 cases last year, Social Security checks were forged, Ms. Tillman says. Nine times out of 10, problems with benefits payments are associated with paper checks, she says. The debit-card accounts are protected by PIN numbers and FDIC insured.
For other articles on the same topic, see:
Update: 01/19/08:

Professor Gerry Beyer noted this posting on the Wills, Trusts & Estates Prof Blog, which he authors, in his own posting, entitled "Treasury Department Going Plastic" (01/19/08). He provided a link here too.

A technology publication, oriented to federal data processing systems, published an article noting the proposed new Social Security Debit Card. See:
"A debit card you can bank on", by Mary Mosquer, posted by Federal Computer Week on January 18, 2008.