One of the primary duties of US Treasury is to oversee the distribution of federal benefits. In the initial years, physical cash currency was the major component of US Treasury. Gradually, it switched over to paper checks, to reduce the risks associated with physical cash.
The digital age embraced the Payment processors, and the benefits of Safe ePayments encouraged the Payment Processors to migrate from paper to electronic.
The US Treasury was no exception. As it started migrating from Paper to Electronic, the advantages were overwhelming. The advantages were not only in the cost, but also in reduction of TAT, increased safety.
In April 2010, the US Treasury decided to switch over to a complete ‘all-electronic payments’. The final target date was March 1, 2013. In the intervening 3 years period, a three pronged approach is to be rolled out.
Initiative No 1: All individuals eligible for Social Security, Supplemental Security Income, Veterans, Railroad Retirement and Office of Personnel Management benefits will receive payments electronically. Individuals will be able to receive benefits either through direct deposit into a bank account or Treasury’s Direct Express debit card. MasterCard is the implementation partner for ‘The Direct Express Debit Card’. The requirement will apply to new enrollees beginning on March 1, 2011 and to existing check recipients beginning on March 1, 2013. Currently, 85 percent of federal benefit recipients receive their payments electronically. The challenge is in converting the remaining 15%
Initiative No 2: Some businesses are permitted to use paper Federal Tax Deposit coupons and such businesses will have to make those deposits electronically beginning in 2011. Of course there are few exceptions, primarily businesses with $2,500 or less in quarterly tax liabilities that pay when filing their returns.
Initiative No 3: The third step, US Treasury will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees from September 30, 2010 and for the private sector by January 1, 2011. It is clarified, that this policy covers only paper savings bonds purchased through payroll sales; individuals will still be able to purchase paper savings bonds at financial institutions for themselves and as gifts. The advantages of Treasury Direct, a web-based system will be made known to Payroll savers. Transitioning employees to electronic payroll purchases saves employers administrative costs and allows employees to manage their own bond accounts.
The best part is that these initiatives do not require new legislation and can be accomplished by changes to Treasury’s existing regulations itself.
- Social Security ends paper checks (bankrate.com)
- FiSCA Criticizes U.S. Treasury For Needlessly Scaring Seniors, Vulnerable Populations Into Electronic Forms Of Government Payments (sys-con.com)
- DEAR ABBY Jan. 7: Benefits payments go digital to save money, improve safety (pattidudek.typepad.com)