Electronic Payment of Federal Benefit Payments 

Shawn Wolbert,
MCUL & Affiliates Legislative & Regulatory Affairs Specialist

On March 1, the U.S. Department of Treasury will no longer issue federal benefit payments and nontax payments by check. This will affect many credit union members who still receive their Social Security, Veteran’s Administration and other federal benefits by check. The Treasury has been using the Go Direct website educate members about the transition to electronic federal benefit payments; however your members may have questions about the new process and this FAQ is designed to assist credit unions in answering those questions. The Treasury has produced a video to provide additional information explaining why the U.S. Treasury is requiring electronic benefit payments and explaining what members need to do. 

Q. Why is the U.S. Treasury moving away from sending benefit payments by check?
A. Requiring electronic benefit payments will provide significant savings to the federal government. The current cost associated with paper check benefit payments is $120 million, and it is estimated that it will save U.S. taxpayers more than a billion dollars over the next 10 years. Also in 2010 more than 540,000 Social Security and Supplemental Security Income checks were reported lost or stolen. Electronic payments are safer, easier and more reliable than paper checks.

Q. How is electronic payment of federal benefits beneficial to members?
A. Receiving federal benefit payments electronically is safer for members and can provide more timely access to funds when the delay and risk of lost mailed payments is eliminated. Additionally, the new program provides members with the option of obtaining a Direct Express® card that is used like a credit card.

Q. What are the benefits of the Direct Express® card?
A. Federal Benefit payments can be directly credited to the Direct Express® card. Members can use the card to make purchases everywhere Debit MasterCard® is accepted. The card can also be used to pay bills, buy money orders and get cash. The funds on the card are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law. The Treasury has a video to show members how easy it is to use the Direct Express® card.

Q. What will happen if members do not sign up for electronic payment by March 1?
A. Members who do not convert to an electronic payment option by March 1, may be issued the Direct Express® card, rather than receiving their regular check payment.

Q. If members already receive payments electronically will anything change for them?
A. Members who already receive electronic benefit payments will not experience any changes when the new requirements are put in place on March 1, 2013.

Q. How can members sign up or switch to electronic payments for their federal benefits?
A. Credit union members can sign up for direct deposit by clicking here, or by calling the U.S. Treasury Electronic Payment Solution Center at (800) 333-1795. The Treasury Department has also provided video instruction on the process of switching from paper checks to direct deposit.

Q. Should a member sign up for direct deposit before the March 1st deadline?
A. Yes, members should sign up for direct deposit as soon as possible to ensure that they are not issued the Direct Express® card. There is a processing time to transition a member from checks to other forms of payment and the treasury has stated that they expect a rush as the deadline of March 1st approaches.

Q. Is there a difference between electronic payments, direct deposit and the Direct Express® Card?
A. Electronic payments and direct deposit are the same thing. Both terms used by the Treasury Department refer to a benefit payment that goes straight to the credit union by electronic transfer from the Treasury.  The Direct Express® card is a MasterCard debit card that is issued directly from the Treasury to the member with no credit union interaction or involvement.

Q. What information will members need to sign up for Direct Deposit?
A. Members who want to sign up for direct deposit will need to provide personal information and information that is printed on their Treasury benefit check, which includes:

In cases involving minor children the SSN will always be the child’s SSN and not that of the adult account holder (representative payee) who is also named on the benefit check.  For more information on enrollment requirements click here.

Q. Is there a fee to enroll a member in electronic benefit payments or the Direct Express® card?
A. No. There is no fee to convert the member’s benefit payments to direct deposit or to have the Treasury issue them a Direct Express® card.
Q. Can a credit union employee assist a member in enrolling in electronic benefit payments?
A. Yes. The Go Direct website has a financial institution enrollment process that credit union employees can access to help members enroll for their electronic benefit payments right at the credit union.