Featuring Walt Henderson, Director, EFT Strategy Division
U.S. Department of the Treasury
Small business owners with employees considering or ready for retirement should know that by March 2013 all federal payments including Social Security and Veterans benefits will be paid electronically.
Transcript:
Ron Johnson: In December 2010, the U.S. Department of the Treasury announced that all federal benefit payments such as veterans and Social Security will be paid electronically by March 1st of 2013, and that means paper checks will no longer be an option. And if you’re a small business owner with employees set for retirement or who receive federal benefits, it’s important to let them know that things are about to change.
Hello, I’m Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource, and with us today is Walt Henderson. He’s the director of the Electronic Fund Transfer Strategy Division at the U.S. Department of the Treasury Financial Management Service. Walt, I’d like to welcome you to the program.
Walt Henderson: My pleasure to be here, thanks for having me.
Ron Johnson: Tell us all about the new regulations to pay all federal benefits electronically.
Walt Henderson: Well, last December we published this regulation and it’s a two-step process. First, as of May 1, 2011 of this year, anyone applying for a benefit for the first time such as Social Security or veteran’s benefits will need to select an electronic payment option.
Secondly, if you’re an existing check recipient, you’ve already been receiving your benefits and you’re receiving those by paper check, you have until March 1, 2013 to switch over to an electronic payment method. We give them a little more time because they’ve been getting the checks and they need to educate themselves about the options that are available.
Ron Johnson: Why will our small business community need to be aware of these changes?
Walt Henderson: The small business community needs to be aware -- I mean, the small business community is a trusted resource for the people that are approaching retirement or perhaps already retired and small business owners perhaps who are thinking about retirement or have employees, so they’re in a great position to pass along this information about this requirement to their employees. And it’s just that it’s an additional thing that they -- service that they can provide their employees.
Ron Johnson: And why are electronic payments a better option than paper checks?
Walt Henderson: These days, electronic payments are so commonplace, but we still have about eight and a half million people who receive paper checks each month. So that’s eight and a half million paper checks that we mail out, and a lot of problems can happen. They can be taken from mailboxes, they can be forged and cashed without permission, and getting payments electronically can protect people from financial crimes like check theft and fraud. In fact, last year, more than 540,000 Social Security and supplemental security income checks were reported lost or stolen and had to be re-issued. It’s estimated that there’s cost savings, $93 million in checks issued by the Treasury were fraudulently endorsed in 2010. It’s also going to save money; it’s estimated over the next 10 years that there’ll be a billion dollars in savings and taxpayers will no longer incur that $120 million a year price tag which is associated with printing and mailing those paper checks.
Ron Johnson: Do individuals still have a choice as to how they receive their money?
Walt Henderson: People can opt to go with direct deposit to their existing bank or credit union account, or we have something available called the Direct Express Prepaid Debit MasterCard, and we recommend those as both options for receiving payments electronically. Direct deposit is easy, people can sign up, as I mentioned, at their bank or credit union and the money goes into their account on the morning of the payment date, it’s available. The Direct Express card, it’s a prepaid debit card and it’s a safe, low-cost alternative to paper checks for federal benefit payments. You can use like any prepaid debit card out there on the market to make retail purchases, get cash back for no charge, no bank account's required, no credit check is required as well, and for information on the fees and features we have a website at www.godirect.org.
Ron Johnson: Now, what happens if an individual doesn’t have a bank account?
Walt Henderson: Well, that’s exactly why we have the Direct Express prepaid card. It was designed specifically for the federal benefit recipient that does not have a bank account. And many people have had bank accounts in the past, or have perhaps had a bad experience with one, and this is a low-cost option to receive their payment in a safe and convenient way. It’s fully FDIC insured, it has consumer protections. In fact, we have more than 2.5 million benefit recipients who have enrolled for the Direct Express card since we launched it in 2008. And we always do custumer surveys and consistently we find that 95 percent of our Direct Express cardholders are satisfied or very satisfied with the Direct Express card.
Ron Johnson: Can you tell us what the Treasury is doing to inform the people about the change to how federal benefits will be paid?
Walt Henderson: Well, we have this campaign called Go Direct and I manage the Go Direct program here at Treasury, and it is a nationwide public education campaign about electronic payments, about direct deposit and the Direct Express Card. And it's very partner-oriented; we just don’t want people hearing from the Treasury Department the reasons we’re doing this. The campaign reaches out to trusted voices in the community, agencies such as the Small Business Administration, to pass along the information so people can hear the same information from that trusted voice in the community. And I’ve mentioned the website earlier and I encourage people to go to www.godirect.org to find out more information about the campaign and about the electronic payment alternatives that are available.
Ron Johnson: If someone is about to apply for federal benefits, what is it they need to know?
Walt Henderson: When they go to the federal agency to apply for their federal benefits, they really just need to have their bank account or credit union account information. It typically has the routing number and the account number, that’s at the bottom of your personal check. You need to know the type of account you have, whether it’s a checking or a savings account you’re using for direct deposit, and that’s it. It’s fairly simple. For Direct Express, for people that perhaps don’t have a bank account, they just need to tell the person at the federal agency that they would like the Direct Express card to receive their payment electronically and the agency person will sign them up right there on the spot.
Ron Johnson: If you’re already receiving federal benefits by paper checks, what do you need to do?
Walt Henderson: Well, we make it very easy for those check recipients; we have the website that I’ll mention again, www.godirect.org. You can, as I mentioned, learn more about the alternatives, you can also sign up online, that’s a really great feature that a lot of people take advantage of. We also operate a call center at 1-800-333-1795 and you just simply call up and talk to the call agent and provide your checking or savings account information for direct deposit or they can sign you up for the Direct Express card. You can also contact your federal benefit agency directly and they can sign you up. You can visit your bank or your credit union and they can sign you up for direct deposit. So we make it that there are a lot of options and we make it very easy for people.
Ron Johnson: To learn more about the U.S. Treasury’s Electronic Payment Plan to federal employees, go to www.godirect.org or call 1-800-333-1795. For more information about SBA’s programs and services visit www.sba.gov. Until next time, I’m Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource.
[End of transcript]
