After the successful 2007 launch of its Direct Express prepaid card offered to Social Security recipients, the US Department of Treasury continues to integrate new federal benefits into its check to electronic payment initiative. This includes veterans’ benefits, railroad retirement, and other government-issued benefits. Beginning on May 1, anyone newly applying for Social Security or other federal benefits will need to choose an electronic payment method. People currently receiving their federal benefits by cheque will have to switch to direct deposit by March 1, 2013.
The Treasury says electronic payments now make up over three-quarters of all noncash transactions in the US and there were 5.7 billion fewer cheques written in 2009 than in 2006, a decline of 6.1 percent per year.
Approximately eight in 10 already receive their Social Security or other federal benefit payment electronically.
In 2009, an estimated $3.49 billion was loaded on the Direct Express cards, up 197% from $1.17 billion the previous year, according to findings from Mercator Advisory Group’s Annual Prepaid Benchmark Reports (Open, Closed, and Forecast). The Direct Express card offered to Social Security recipients by the Financial Management Service, a bureau of the Treasury, ranks among the largest ever prepaid programs.
Mercator is now preparing to survey the leading prepaid processors and card issuers again to determine the actual 2010 growth of the prepaid industry, and will release its findings in the Fall.
Learn more about Mercator Advisory Group’sOpen-Loop Prepaid Benchmark.
Visit the PaymentsJournal Prepaid Strategy Room for information and discussion on this topic.
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