Direct Express® Program

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.

COST SAVINGS FOR TAXPAYERS AND CARDHOLDERS

The cost of cashing paper checks can add up quickly—particularly for unbanked beneficiaries. Estimates show that Direct Express® beneficiaries saved more than $100 million in check-cashing fees in 2015 alone. This is based on approximately 53 million payments made in 2015, 80 percent of which were clear check replacements, multiplied by the least expensive check-cashing option widely available of $3 per check. The actual check-cashing savings are likely to be substantially higher than this conservative estimate. Distributing benefits electronically saves the government money, too. It would have cost the government approximately $66 million to send the 53 million checks that were replaced by Direct Express® in 2015. While the government still has some costs associated with disbursing funds using the Direct Express® card, the program saved the government (and taxpayers) around $53 million in 2015.

PROGRAM FOCUSES

The program has the following focuses:

Helping Millions of Americans Join the Financial Mainstream

The Direct Express® program quickly and safely distributes government benefits to 4.5 million Americans each month, at the same time providing the knowledge and tools they need to participate fully in the modern digital economy.

Customer Service Meets Beneficiaries Where They Are

The program fields a dedicated and knowledgeable customer service team to provide support 24/7—helping beneficiaries keep track of their spending and balances, confirming benefit deposits, explaining the features of their card and answering their questions.

Easier and Faster Access to Funds

By automatically depositing benefits to a prepaid card, the program gives payees immediate access to their funds, without the risks of missing checks or lost or stolen cash. In 2017, Direct Express® loaded benefits onto recipient cards 55 million times.

Building a Digital Lifeline

Beneficiaries are able to check their account balances and view recent transactions any time they wish, using a mobile app introduced in 2015.

Strengthening Security

In 2015, the Direct Express team moved to chip technology —the global standard in security—for use in place of the magnetic stripe on Direct Express cards. The Direct Express® card has the same consumer protections for fraud, loss and errors that are provided to traditional bank account holders under the Consumer Financial Protection Bureau’s Regulation E.

EMPOWERING BENEFICIARIES WITH FINANCIAL EDUCATION

The Direct Express® mission is to give beneficiaries the knowledge and confidence to successfully manage their financial lives in ways that maximize the value and convenience of their benefits, while minimizing fees.

CONSTANTLY INNOVATING

To better serve beneficiaries, Direct Express® continually innovates new education programs, more ways to access funds and other features to make Direct Express® more secure, cost-effective and convenient.