By Mark Brousseau
According to the results of the Federal Reserve’s last two Payments Studies, electronic payments have risen from 43 percent of all non-cash payments to 66 percent of such payments over the period of 2000 to 2006. Conversely, checks have gone from 67 percent to 34 percent during this same period.
The message is clear: electronic payments are replacing check payments at a very rapid rate. So, it may surprise you to learn that one of the most common questions heard by providers of electronic payment solutions is, “do you have any capabilities for handling our paper-based payments?”
Why the continued interest in paper? Larry Jones of Cash Management Solutions, Inc. (larry.jones@cashmgmt.com) says the answer is simple: Although there are literally billions of payments that have migrated to electronic methods, the majority of high dollar and business-to-business payments are still made by check. This means that paper-based payment processing continues to be of great importance to many of the financial industry’s most prized clients, their corporate customers, Jones said.
Jones believes payments service providers must maintain their paper-based capabilities as they add alternative electronic channels. And, it is a well-known fact, he adds, that there is no system so efficient that it can overcome the inefficiencies of having to run it separately from, and simultaneously with, the system it is replacing.
“Until the landscape changes to the point where electronics replace all paper-payments, billers will continue to ask for methods and technologies that can affect a seamless convergence of these two distinct payment types,” Jones predicts. “Any payments service provider who is currently offering only paper processing should definitely be looking for the ability to offer on-line, direct to biller, bill payment services to their customers in a seamlessly merged deliverable.”
Likewise, any company that makes their living providing on-line bill payment systems or services should be looking for capabilities or partners who process paper payments and provide outputs that can be merged and delivered in a similarly seamless fashion, Jones adds.
What do you think? Post your comment below.
Showing posts with label checks. Show all posts
Showing posts with label checks. Show all posts
Tuesday, January 27, 2009
Tuesday, October 14, 2008
Identity Theft: Not Dead Yet
Posted by Mark Brousseau
An interesting article from Fairfax Connection on the resiliency of identity theft crooks:
What’s in a Name?
Though national statistics are trending downward, millions of Americans still at risk for identity theft.
By Derek B. Johnson/The Connection
Wednesday, October 08, 2008
In nature, the early bird gets the worm.
Residents going through their bills one day and finding thousands of dollars worth of mystery purchases would be wise to follow a similar mantra: the early bird gets his identity back.
That is, at least, according to retired investigator Tom Polhemus of the financial crimes section of the Fairfax County Police Department. The sooner you act once you know your identity has been stolen, the more hours you save down the road dealing with police, banks, credit unions and bill collectors.
"The main thing that we advocate is you have a personal responsibility to keep on top of your own identity," said Polhemus. "You can’t expect the government, police or financial institutions to help you. If you don’t know, you don’t know."
Though national statistics are trending downward, identity theft remains one of the most prevalent crimes in the country. According to surveys conducted by the Federal Trade Commission and Javelin Strategy and Research, 8.4 million Americans reported being a victim of identity theft in 2007, with just over $50 billion being stolen. Those numbers were down significantly from previous years, with 10.1 million Americans in 2003 and 9.3 million Americans in 2005 reporting the same crime. However those statistics do not take into account victims who are unaware their identity has been stolen, and many cases may go unreported for months or even years until a victim hears from an out-of-state bill collector or a business looking for payment. Tammy Nealy is the director of public affairs for Lifelock, an Arizona-based personal fraud protection company. For those people still carrying their Social Security card in their wallet or purse, she has a message.
"Stop. You’re going to get pick-pocketed," said Nealy. "You never think your wallet or your purse is going to be stolen, but it happens."
In addition to providing information and education on keeping personal information safe, her company charges a monthly fee to contact each of the three major credit bureaus and put a fraud alert on a client’s account. Nealy said a victim of identity theft could spend up to hundreds of hours talking with police, creditors and other institutions in order to restore their credit back to its original state. The mean resolution time per victim, according to the 2007 FTC/Javelin survey, was 40 hours.
THE PROBLEM has become so prevalent because thieves have so many ways that they can use just a few pieces of personal information to impersonate their victim. Polhemus named writing personal checks was as one of the worst practices a person can do if they want to protect their identity.
"Paper checks are terrible. It’s too easy once you write a paper check, now I’ve got your routing and account number," he said.
Those numbers combined with a cellular phone number or other pieces of information are usually enough to rack up thousands of dollars in online gaming or purchases. Seniors and children are at a higher risk for fraud or identity theft than others, according to Nealy. Because most young children lack any pre-existing forms of identification and parents rarely check up on their children’s credit report, their identities are ripe for use. A child’s age does not matter, she said, because most children have no previously established credit.
As long as a thief uses the information to beat them to it, most children won’t discover they were victims until years later, while they’re applying for their first loan or checking account. If parents begin receiving catalogs or magazines in their child’s name, that’s usually a red flag signaling that identity is being used by someone else.
"It may be cute, but it can be damaging. That means there’s a credit report for that child and bank has sold that information to a marketing company," Nealy said.
Seniors, she said, tend to be more susceptible to phone or e-mail scams, giving out personal information to people impersonating police or government officials. While she called a person’s Social Security number the "key" to all other information pertaining to a person, the truth is very little information is required to steal an identity. E. Hunt Burke, president of Burke and Herbert Bank and Trust Company, said his bank deals regularly with such cases.
"The thing we see the most is people taking advantage of the elderly customers" Burke said. He also cited phone and e-mail scams as the preferred method thieves use when dealing with seniors.
In the case of a customer who has become a recent victim of identity theft, Burke and Herbert Bank has a 24-hour phone line to call into and will immediately freeze an account when identity theft is reported. The bank also provides secure e-mail accounts to their customers for sensitive information.
There is very little in the way of "too much" when it comes to protecting your identity, said Burke.
"Every week there’s a new technology or scam. I saw stainless steel wallets the other day and thought that was silly, but people really do have devices in their pockets that can read the [credit] cards in your wallet," he said.
Polhemus said as long as a victim is diligent in keeping track of their credit reports and notify the police and creditors within 60 days of the theft, the amount of damage and liability will be drastically curbed. Wait too long, and a person may double or triple the amount of time spent clearing his or her name. Victims may even be on the hook for some of the costs.
"If you open up a bank statement, look at it and see fraud, call the bank. They will take care of you," said Polhemus. "If you know you’re busy or the statement is depressing you and you throw it in the drawer, you are responsible for paying for it. You’re on the hook for that money."
Because fraud and identity crimes rely heavily on rapidly changing technology, state and federal laws are still catching up to the practices being put in place by the criminals they’re hunting.
Using information taken from a mailbox in Virginia, a thief can run up bills in Georgia, Wisconsin, California or any other state. That severely hampers the ability of investigators at the county level, like Polhemus, from pursuing all but the most serious and costly identity crimes.
"Our criteria, the things that we look at before we investigate a case of identity theft, is, first off, do we have a Fairfax County resident without money? Then we look at likelihood of successful prosecution," he said. "We could subpoena records and find out who was making those calls, but we’re not going to extradite him from Georgia."
Nealy said credit agencies should face tougher fines and regulations when their databanks of personal information are lost or stolen. "If there was a requirement for third-parties to have certain protocols in place, that’s really going to hold these companies accountable for information," she said.
An interesting article from Fairfax Connection on the resiliency of identity theft crooks:
What’s in a Name?
Though national statistics are trending downward, millions of Americans still at risk for identity theft.
By Derek B. Johnson/The Connection
Wednesday, October 08, 2008
In nature, the early bird gets the worm.
Residents going through their bills one day and finding thousands of dollars worth of mystery purchases would be wise to follow a similar mantra: the early bird gets his identity back.
That is, at least, according to retired investigator Tom Polhemus of the financial crimes section of the Fairfax County Police Department. The sooner you act once you know your identity has been stolen, the more hours you save down the road dealing with police, banks, credit unions and bill collectors.
"The main thing that we advocate is you have a personal responsibility to keep on top of your own identity," said Polhemus. "You can’t expect the government, police or financial institutions to help you. If you don’t know, you don’t know."
Though national statistics are trending downward, identity theft remains one of the most prevalent crimes in the country. According to surveys conducted by the Federal Trade Commission and Javelin Strategy and Research, 8.4 million Americans reported being a victim of identity theft in 2007, with just over $50 billion being stolen. Those numbers were down significantly from previous years, with 10.1 million Americans in 2003 and 9.3 million Americans in 2005 reporting the same crime. However those statistics do not take into account victims who are unaware their identity has been stolen, and many cases may go unreported for months or even years until a victim hears from an out-of-state bill collector or a business looking for payment. Tammy Nealy is the director of public affairs for Lifelock, an Arizona-based personal fraud protection company. For those people still carrying their Social Security card in their wallet or purse, she has a message.
"Stop. You’re going to get pick-pocketed," said Nealy. "You never think your wallet or your purse is going to be stolen, but it happens."
In addition to providing information and education on keeping personal information safe, her company charges a monthly fee to contact each of the three major credit bureaus and put a fraud alert on a client’s account. Nealy said a victim of identity theft could spend up to hundreds of hours talking with police, creditors and other institutions in order to restore their credit back to its original state. The mean resolution time per victim, according to the 2007 FTC/Javelin survey, was 40 hours.
THE PROBLEM has become so prevalent because thieves have so many ways that they can use just a few pieces of personal information to impersonate their victim. Polhemus named writing personal checks was as one of the worst practices a person can do if they want to protect their identity.
"Paper checks are terrible. It’s too easy once you write a paper check, now I’ve got your routing and account number," he said.
Those numbers combined with a cellular phone number or other pieces of information are usually enough to rack up thousands of dollars in online gaming or purchases. Seniors and children are at a higher risk for fraud or identity theft than others, according to Nealy. Because most young children lack any pre-existing forms of identification and parents rarely check up on their children’s credit report, their identities are ripe for use. A child’s age does not matter, she said, because most children have no previously established credit.
As long as a thief uses the information to beat them to it, most children won’t discover they were victims until years later, while they’re applying for their first loan or checking account. If parents begin receiving catalogs or magazines in their child’s name, that’s usually a red flag signaling that identity is being used by someone else.
"It may be cute, but it can be damaging. That means there’s a credit report for that child and bank has sold that information to a marketing company," Nealy said.
Seniors, she said, tend to be more susceptible to phone or e-mail scams, giving out personal information to people impersonating police or government officials. While she called a person’s Social Security number the "key" to all other information pertaining to a person, the truth is very little information is required to steal an identity. E. Hunt Burke, president of Burke and Herbert Bank and Trust Company, said his bank deals regularly with such cases.
"The thing we see the most is people taking advantage of the elderly customers" Burke said. He also cited phone and e-mail scams as the preferred method thieves use when dealing with seniors.
In the case of a customer who has become a recent victim of identity theft, Burke and Herbert Bank has a 24-hour phone line to call into and will immediately freeze an account when identity theft is reported. The bank also provides secure e-mail accounts to their customers for sensitive information.
There is very little in the way of "too much" when it comes to protecting your identity, said Burke.
"Every week there’s a new technology or scam. I saw stainless steel wallets the other day and thought that was silly, but people really do have devices in their pockets that can read the [credit] cards in your wallet," he said.
Polhemus said as long as a victim is diligent in keeping track of their credit reports and notify the police and creditors within 60 days of the theft, the amount of damage and liability will be drastically curbed. Wait too long, and a person may double or triple the amount of time spent clearing his or her name. Victims may even be on the hook for some of the costs.
"If you open up a bank statement, look at it and see fraud, call the bank. They will take care of you," said Polhemus. "If you know you’re busy or the statement is depressing you and you throw it in the drawer, you are responsible for paying for it. You’re on the hook for that money."
Because fraud and identity crimes rely heavily on rapidly changing technology, state and federal laws are still catching up to the practices being put in place by the criminals they’re hunting.
Using information taken from a mailbox in Virginia, a thief can run up bills in Georgia, Wisconsin, California or any other state. That severely hampers the ability of investigators at the county level, like Polhemus, from pursuing all but the most serious and costly identity crimes.
"Our criteria, the things that we look at before we investigate a case of identity theft, is, first off, do we have a Fairfax County resident without money? Then we look at likelihood of successful prosecution," he said. "We could subpoena records and find out who was making those calls, but we’re not going to extradite him from Georgia."
Nealy said credit agencies should face tougher fines and regulations when their databanks of personal information are lost or stolen. "If there was a requirement for third-parties to have certain protocols in place, that’s really going to hold these companies accountable for information," she said.
Sunday, August 3, 2008
Economy Wallops Credit Card Use
Posted by Mark Brousseau
An interesting article from CNN on declining credit card use:
Study: Some Americans cut credit card use
By Ronni BerkeCNN's American Morning
STRATFORD, Connecticut (CNN) -- When Cappie and Don Perras saw their stock market investments tank this year, they decided to tighten their belts. They drive fuel efficient cars around their Connecticut town and eat at cheaper restaurants if they eat out at all.
To avoid impulse buying, they avoid the mall. And for now, at least, they've put away the credit cards.
This marks a big change from their old attitude.
"I felt secure with my credit cards like, 'Oh well, I always have my credit cards,' " says Cappie Perras, a special education teacher. "Now I feel like, it's almost like there's a big caution sign in front of the credit card, 'Do Not Use, Only In Case of Emergency,' " she adds.
The Perrases are examples of a trend building among middle-income and middle-aged consumers to cut back on credit card use, according to a new study by Javelin Strategy & Research, a financial research firm. Forty percent of consumers surveyed said they're pulling out their credit cards less than they were at the beginning of the year.
Don Perras, a college professor approaching retirement age, says the family has stopped using cards, except for rare instances like booking hotel rooms on the road. Instead, the couple uses their debit cards.
The aim: to soon be free of credit card debt.
"It would be a top priority," Don Perras said.
But with the high cost of living, the Perrases are having trouble making a dent in their $8,000 credit card balance.
"I used to be able to maybe put $600 towards the debt. ... Now it's maybe if I'm lucky, $200," his wife says.
The Perras family has plenty of company. Americans carry approximately $961.8 billion in revolving debt, according to the Federal Reserve Board. Delinquency rates on credit cards are at the highest levels since the end of 2002.
Even as consumers cut back on using credit cards, they're finding it harder to pay down their balances, says Javelin President James Van Dyke.
"In some cases they're out of work or perhaps their wages have been cut back, or maybe they had a variable rate which they have to pay more for than ever before," Van Dyke said. When people use their credit cards less, "this changes what goes on in the industry because credit card companies typically make a lot of their money on the fees they charge merchants."
The reduction in revenue from new purchases, combined with concerns about new delinquencies, pose big worries for the credit card industry, Van Dyke says.
"Credit card companies are running a bit scared right now, and for good reason, because people are having a difficult time paying off their balances; and everyday consumers, they're cutting into their purchases right now -- both luxury goods and even the basic necessities," Van Dyke says.
According to the Javelin study, nearly 70 percent of financial institutions say they have cut back on credit card solicitations. Six of 10 say they are limiting the amount of credit offered to customers.
James Chessen, chief economist for the American Bankers Association, says the industry is well prepared for the economic downturn. "It's all a matter of managing that risk, because you know the volume will be off, you know the economy is riskier today than it was a year ago. So you naturally take that into account so you have the capacity to come out of this even stronger than you came into it," he added.
For Cappie Perras, being stronger means cutting back on plastic. "I don't feel good about the credit cards," she says. "I regret that we got into so much credit card debt."
Think this is part of a trend?
Post your comment below.
An interesting article from CNN on declining credit card use:
Study: Some Americans cut credit card use
By Ronni BerkeCNN's American Morning
STRATFORD, Connecticut (CNN) -- When Cappie and Don Perras saw their stock market investments tank this year, they decided to tighten their belts. They drive fuel efficient cars around their Connecticut town and eat at cheaper restaurants if they eat out at all.
To avoid impulse buying, they avoid the mall. And for now, at least, they've put away the credit cards.
This marks a big change from their old attitude.
"I felt secure with my credit cards like, 'Oh well, I always have my credit cards,' " says Cappie Perras, a special education teacher. "Now I feel like, it's almost like there's a big caution sign in front of the credit card, 'Do Not Use, Only In Case of Emergency,' " she adds.
The Perrases are examples of a trend building among middle-income and middle-aged consumers to cut back on credit card use, according to a new study by Javelin Strategy & Research, a financial research firm. Forty percent of consumers surveyed said they're pulling out their credit cards less than they were at the beginning of the year.
Don Perras, a college professor approaching retirement age, says the family has stopped using cards, except for rare instances like booking hotel rooms on the road. Instead, the couple uses their debit cards.
The aim: to soon be free of credit card debt.
"It would be a top priority," Don Perras said.
But with the high cost of living, the Perrases are having trouble making a dent in their $8,000 credit card balance.
"I used to be able to maybe put $600 towards the debt. ... Now it's maybe if I'm lucky, $200," his wife says.
The Perras family has plenty of company. Americans carry approximately $961.8 billion in revolving debt, according to the Federal Reserve Board. Delinquency rates on credit cards are at the highest levels since the end of 2002.
Even as consumers cut back on using credit cards, they're finding it harder to pay down their balances, says Javelin President James Van Dyke.
"In some cases they're out of work or perhaps their wages have been cut back, or maybe they had a variable rate which they have to pay more for than ever before," Van Dyke said. When people use their credit cards less, "this changes what goes on in the industry because credit card companies typically make a lot of their money on the fees they charge merchants."
The reduction in revenue from new purchases, combined with concerns about new delinquencies, pose big worries for the credit card industry, Van Dyke says.
"Credit card companies are running a bit scared right now, and for good reason, because people are having a difficult time paying off their balances; and everyday consumers, they're cutting into their purchases right now -- both luxury goods and even the basic necessities," Van Dyke says.
According to the Javelin study, nearly 70 percent of financial institutions say they have cut back on credit card solicitations. Six of 10 say they are limiting the amount of credit offered to customers.
James Chessen, chief economist for the American Bankers Association, says the industry is well prepared for the economic downturn. "It's all a matter of managing that risk, because you know the volume will be off, you know the economy is riskier today than it was a year ago. So you naturally take that into account so you have the capacity to come out of this even stronger than you came into it," he added.
For Cappie Perras, being stronger means cutting back on plastic. "I don't feel good about the credit cards," she says. "I regret that we got into so much credit card debt."
Think this is part of a trend?
Post your comment below.
Monday, July 7, 2008
Social Security Goes Electronic
Posted by Mark Brousseau
An interesting article from The Philadelphia Inquirer:
Social Security offering a debit-card option
By Harold Brubaker
Inquirer Staff Writer
Social Security recipients who receive paper checks because they do not use banks have a new way to get their money.
The U.S. Treasury Department said yesterday that it would begin pitching its new Direct Express debit card to 2.4 million beneficiaries from Maine to Virginia. Information about the card will come with this month's checks.
These recipients include nearly 250,000 people in Philadelphia and surrounding counties in Pennsylvania and about the same number in New Jersey.
"You can easily use this card to manage your money every month with no fees," said Judith R. Tillman, the commissioner of the department's Financial Management Service.
The card is designed to prevent lost checks, thwart check thieves, and save cashing fees that average $6 per check, she said.
Most Social Security recipients receive benefits by direct deposit into their bank accounts. Those without bank accounts typically use check-cashing firms.
The debit cards, issued by Comerica Bank of Dallas, allow users to track their spending at no charge on a Web site or through an automated telephone line. It costs 75 cents a month to get a paper statement. The system will not allow a card user to withdraw more than the available balance. That means there are no overdraft fees, which bedevil many elderly bank customers.
"It seems like a pretty good product," said Leslie Parrish, a senior researcher in the Washington office of the nonprofit Center for Responsible Lending.
"It eliminates the need to go to a check casher, but it also has a leg up on regular bank accounts if people are worried about overdrafting through a debit transaction," she said.
Tillman said her agency sends 489,000 Social Security and Supplemental Security Income checks to Pennsylvania every month, including 241,000 to Philadelphia and the surrounding area. In New Jersey, the figure is 263,000. She did not have a breakout for South Jersey.
If all four million people nationwide who receive Social Security or disability benefits but do not have bank accounts were to sign up for the debit card, taxpayers would save $42 million a year, said Tillman, a graduate of Glassboro State College, now called Rowan University.
The Treasury sent 59.1 million Social Security and disability payments in May. All but 10.5 million of them were deposited directly into bank accounts. The debit card is available to anyone who receives those benefits.
Social Security and Supplemental Security Income recipients may sign up for the card by calling toll-free 1-877-212-9991 or visiting www.USDirectExpress.com.
An interesting article from The Philadelphia Inquirer:
Social Security offering a debit-card option
By Harold Brubaker
Inquirer Staff Writer
Social Security recipients who receive paper checks because they do not use banks have a new way to get their money.
The U.S. Treasury Department said yesterday that it would begin pitching its new Direct Express debit card to 2.4 million beneficiaries from Maine to Virginia. Information about the card will come with this month's checks.
These recipients include nearly 250,000 people in Philadelphia and surrounding counties in Pennsylvania and about the same number in New Jersey.
"You can easily use this card to manage your money every month with no fees," said Judith R. Tillman, the commissioner of the department's Financial Management Service.
The card is designed to prevent lost checks, thwart check thieves, and save cashing fees that average $6 per check, she said.
Most Social Security recipients receive benefits by direct deposit into their bank accounts. Those without bank accounts typically use check-cashing firms.
The debit cards, issued by Comerica Bank of Dallas, allow users to track their spending at no charge on a Web site or through an automated telephone line. It costs 75 cents a month to get a paper statement. The system will not allow a card user to withdraw more than the available balance. That means there are no overdraft fees, which bedevil many elderly bank customers.
"It seems like a pretty good product," said Leslie Parrish, a senior researcher in the Washington office of the nonprofit Center for Responsible Lending.
"It eliminates the need to go to a check casher, but it also has a leg up on regular bank accounts if people are worried about overdrafting through a debit transaction," she said.
Tillman said her agency sends 489,000 Social Security and Supplemental Security Income checks to Pennsylvania every month, including 241,000 to Philadelphia and the surrounding area. In New Jersey, the figure is 263,000. She did not have a breakout for South Jersey.
If all four million people nationwide who receive Social Security or disability benefits but do not have bank accounts were to sign up for the debit card, taxpayers would save $42 million a year, said Tillman, a graduate of Glassboro State College, now called Rowan University.
The Treasury sent 59.1 million Social Security and disability payments in May. All but 10.5 million of them were deposited directly into bank accounts. The debit card is available to anyone who receives those benefits.
Social Security and Supplemental Security Income recipients may sign up for the card by calling toll-free 1-877-212-9991 or visiting www.USDirectExpress.com.
Wednesday, June 11, 2008
Social Security Checks Going Debit
Posted by Mark Brousseau
The move toward electronic payments has now impacted Social Security checks:
Social Security checks now offer debit card option
By Kathy Chu, USA TODAY
For millions of Americans, accessing their Social Security benefits is now just a card swipe away.
A new debit card being offered by the Treasury Department gives nearly 4 million recipients who have no bank accounts an alternative to paper checks that they must cash, usually at a price.
The new debit card, issued by Comerica Bank, was quietly marketed to nearly 3.5 million recipients of Social Security and Supplemental Security Income this spring. It's now available to any benefit recipient via usdirectexpress.com.
States already load child support payments and unemployment benefits onto debit cards. The federal government has used prepaid debit cards, too, for disaster relief aid. But the Social Security debit card is the largest push to date to switch from costly paper checks to electronic payments.
"Our goal is to move to 100% electronic payments," says Judy Tillman, commissioner of Treasury's Financial Management Service. "It's safer and more reliable for delivery" of funds.
The new debit card will eliminate the need for consumers without bank accounts to use costly check-cashing services, the Treasury Department says. It will also save the government money. The Treasury estimates that if all 4 million recipients without bank accounts signed up for the card, it would save $42 million a year.
As with any other debit card, using it won't always be free. For instance, holders typically will get one free ATM withdrawal per month. After that, they'll be charged 90 cents for each withdrawal. A fee of 75 cents per month also applies if card holders want paper statements mailed to them.
Still, the fees are among the lowest in the industry for such services, says Nora Arpin, director of government electronic solutions for Comerica.
About 80% of the 57.3 million Social Security and SSI recipients already have their benefits directly deposited into their bank accounts. The challenge will be to get the remaining consumers to switch from checks to electronic payments such as direct deposit or the new debit card.
The card "might be confusing if they're not savvy about electronic payments and don't have (experience with) a bank account," says Chris Allen, a director for Hitachi Consulting.
The move toward electronic payments has now impacted Social Security checks:
Social Security checks now offer debit card option
By Kathy Chu, USA TODAY
For millions of Americans, accessing their Social Security benefits is now just a card swipe away.
A new debit card being offered by the Treasury Department gives nearly 4 million recipients who have no bank accounts an alternative to paper checks that they must cash, usually at a price.
The new debit card, issued by Comerica Bank, was quietly marketed to nearly 3.5 million recipients of Social Security and Supplemental Security Income this spring. It's now available to any benefit recipient via usdirectexpress.com.
States already load child support payments and unemployment benefits onto debit cards. The federal government has used prepaid debit cards, too, for disaster relief aid. But the Social Security debit card is the largest push to date to switch from costly paper checks to electronic payments.
"Our goal is to move to 100% electronic payments," says Judy Tillman, commissioner of Treasury's Financial Management Service. "It's safer and more reliable for delivery" of funds.
The new debit card will eliminate the need for consumers without bank accounts to use costly check-cashing services, the Treasury Department says. It will also save the government money. The Treasury estimates that if all 4 million recipients without bank accounts signed up for the card, it would save $42 million a year.
As with any other debit card, using it won't always be free. For instance, holders typically will get one free ATM withdrawal per month. After that, they'll be charged 90 cents for each withdrawal. A fee of 75 cents per month also applies if card holders want paper statements mailed to them.
Still, the fees are among the lowest in the industry for such services, says Nora Arpin, director of government electronic solutions for Comerica.
About 80% of the 57.3 million Social Security and SSI recipients already have their benefits directly deposited into their bank accounts. The challenge will be to get the remaining consumers to switch from checks to electronic payments such as direct deposit or the new debit card.
The card "might be confusing if they're not savvy about electronic payments and don't have (experience with) a bank account," says Chris Allen, a director for Hitachi Consulting.
Friday, February 8, 2008
30 Billion And Dropping
By Mark Brousseau
During a presentation at this week’s BAI TransPay conference at the Gaylord Texan Resort & Convention Center in Grapevine, TX, Richard Oliver, executive vice president, Retail Payments Office at the Federal Reserve Bank, provided key results of the Fed’s latest three-year study of non-cash payments. The information helps define the markets for vendors, a leading provider of distributed capture solutions told me today. Oliver said there were about 30 billion checks written in 2006. The breakdown:
51 percent of the checks were written by consumers
... 32 percent of these were consumer to business remittance checks
... 6 percent were consumer to business remittance at point of sale (remote remittance)
... 13 percent were consumer to business point of sale (Back Office Conversion eligible)
25 percent of the checks were written by businesses to other businesses (includes governments)
... 16 percent were business to business (wholesale remittance)
... 5 percent were business to business remittance at point of sale
... 3 percent were business to business point of sale
17 percent of the checks were business to consumer (payroll, refunds, etc.)
7 percent were consumer to consumer casual
Note: the numbers don't add up to 100 percent because of Federal Reserve Bank rounding. Another key statistic that Oliver provided was that 2.6 billion checks were converted to ACH in 2006.
What do you think? E-mail me at m_brousseau@msn.com.
During a presentation at this week’s BAI TransPay conference at the Gaylord Texan Resort & Convention Center in Grapevine, TX, Richard Oliver, executive vice president, Retail Payments Office at the Federal Reserve Bank, provided key results of the Fed’s latest three-year study of non-cash payments. The information helps define the markets for vendors, a leading provider of distributed capture solutions told me today. Oliver said there were about 30 billion checks written in 2006. The breakdown:
51 percent of the checks were written by consumers
... 32 percent of these were consumer to business remittance checks
... 6 percent were consumer to business remittance at point of sale (remote remittance)
... 13 percent were consumer to business point of sale (Back Office Conversion eligible)
25 percent of the checks were written by businesses to other businesses (includes governments)
... 16 percent were business to business (wholesale remittance)
... 5 percent were business to business remittance at point of sale
... 3 percent were business to business point of sale
17 percent of the checks were business to consumer (payroll, refunds, etc.)
7 percent were consumer to consumer casual
Note: the numbers don't add up to 100 percent because of Federal Reserve Bank rounding. Another key statistic that Oliver provided was that 2.6 billion checks were converted to ACH in 2006.
What do you think? E-mail me at m_brousseau@msn.com.
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