Over a decade ago, the U.S. Department of the Treasury’s Bureau of the Fiscal Service (Fiscal Service) was faced with the challenge of phasing out paper checks in favor of an electronic payment option, per a congressional mandate. However, millions of Americans did not have bank accounts or a means of getting an electronic payment. How this challenge was overcome is a story of successful government. The Direct Express® Prepaid Debit Mastercard® has replaced costly paper checks for 4.5 million Americans, while also reducing cost to taxpayers.
Each year, billions of payment transactions are processed by Fiscal Service, approximately 95% of which are electronic. In the past, the paper processes associated with these transactions could be slow, unsecure, and expensive. For every paper check that is converted to an electronic payment the American taxpayer saves about $1. This translates to millions of dollars in cost savings since the program began about 10 years ago. Equally important is the fact that electronic payments provide beneficiaries with a safer, more reliable and convenient way to receive their payments with features similar to a traditional bank account.
In 2008, the Treasury’s Fiscal Service and Comerica Bank launched the Direct Express® Prepaid Debit Mastercard® to give Social Security, Supplemental Security Income (SSI) and Veterans beneficiaries a safer, reliable, convenient, and low-cost alternative to paper checks. Since then, a number of other disbursements can be accessed via the Direct Express® card.
As the Fiscal Service Commissioner at the time, Kim McCoy noted ,“We know electronic payments offers the best option for unbanked individuals – those who once received paper checks and often incurred unnecessary cashing fees. We recognize that the Direct Express® card program has provided millions of Americans important access to the financial mainstream.”
In the years since, Direct Express® has become the largest government prepaid card program for federal benefit recipients.
