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 3.6 million active cardholders, while also reducing cost to taxpayers.

Each year, billions of payment transactions are processed by Fiscal Service, approximately 95% of these 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 14 years ago. Equally important is the fact that electronic payments provide beneficiaries with a safer, more reliable and convenient way to receive their payments, normalizing the way that beneficiaries handle their money, through 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 Veteran 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 (see “A Growing Program”).

In the years since its launch, Direct Express® has become the largest government prepaid card program for federal benefit recipients.

“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.” – Kim McCoy, Fiscal Service Commissioner 2018-2019

COST SAVINGS FOR TAXPAYERS AND CARDHOLDERS

The cost of cashing paper checks can add up quickly—particularly for unbanked beneficiaries. We estimate that Direct Express® beneficiaries save more than $140 million in check-cashing fees annually. This is based on approximately 59 million payments, 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, for example. While the government still had some costs associated with disbursing funds using the Direct Express® card that year, we estimate the program saved the government (and taxpayers) around $53 million.

PROGRAM FOCUSES

The program has the following primary focuses:

Helping Millions of Americans Join the Financial Mainstream

The Direct Express® program quickly and safely distributes government benefits to 3.6 million active cardholders 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

Direct Express® has 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 2021, Direct Express® loaded benefits onto recipient cards 59 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

Since 2015, Direct Express has utilized 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.

The program has two additional secondary focuses:

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. This work is carried out through the Direct Express Financial Education Center.

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.