In a move keeping with the trend toward “green” technology, the federal government will require citizens enrolling in certain government benefit programs after March 1, 2011 to receive their benefits electronically.
This policy shift represents the first part of a three-step process, announced in April 2010, designed to decrease America’s paper dependence. That goal will be initially accomplished by replacing the practice of mailing physical checks to beneficiaries of Social Security, Supplemental Security Income, Railroad Retirement, Office of Personnel Management, and Veterans benefits with either Direct Deposit or the Treasury’s Direct Express Debit program.
While only those people enrolled in these benefits programs after March 1, 2011 will initially be required to choose between the electronic options, those already receiving such benefits will be forced to make the switch on March 1, 2013. Anyone who prefers electronic payment may sign up for it whenever they so choose.
Consumers should practice due diligence in researching the terms of the government debit cards before choosing to receive government payments by this method. Simply because these cards are issued by the government does not mean that they will not have various fees associated with them. While many services, like purchases at retail establishments, cash back, account notifications and the issuance of one replacement card a year are free, others do require fees. For instance, it costs $0.50 to pay a bill, $1.50 to transfer funds to another bank account and $0.75/month to have a paper check mailed to you. A full break down of fees can be found at the Direct Express website.
The second aspect of this paperless plan will require most businesses using paper Federal Tax Deposit coupons to make such payments electronically. Finally, employees will lose the ability to garner paper savings bonds through payroll reductions.
Through the combined implementation of these measures, the Treasury estimates that roughly $400 million and 12 million pounds of paper will be saved within five years. Thus, it will provide benefits, both environmental and economic, something likely to warrant approval from finance experts and environmentalists alike.
“It is undoubtedly a step in the right direction,” said Odysseas Papadimitriou, CEO of WalletHub.com and former Capital One Sr. Director. “It’s great that the government is moving decisively away from paper checks because technology really has passed them by.”
These changes merely represent a scratching on the surface of what is expected in the years to come, in terms of paperless payment options. For example, new cell phone technology is in production that will allow one’s phone to serve as a credit card. Users will simply be able to swipe their phone in the same manner as workplace identification, FAB keys and public transport smart cards.
Such changes, like the government’s shift to paperless payment, stand not only to change the shape of commerce but represent an environmentally-friendly shift as well.