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Question & Answer
Question: In one of the BANKERS' HOTLINE articles there was a mention about "mandatory" direct deposit of social security payments. I thought the government had backed off that requirement.
Answer: You are absolutely correct. When the proposal first came out, it was assumed by all - including the social security people - that all government payments had to be electronic. That's the direction we were heading. Then the folks in congress went home and heard from their voters. When they came back that said that what they really meant was that all government payments had to be made electronically. Now, in case that's confusing…anyone (vendor, contractor, etc.) to whom the government owes money must submit electronic invoices and be paid by electronic means as of January 1, 1999. That date, by the way, will probably change. The government, by all reports, is not ready. The first payment has been made electronically, and made front page news because it was!
As for social security benefit recipients, the final rule says the direct deposit applies only to those people with accounts, and includes a very liberal waiver. So liberal, in fact, that if getting a paper check is what the person wants, they will just do nothing and will continue to get the paper check. Guess all that talk about the "unbanked" millions of people got to them.
Looks like we're just not going to get rid of those long lines on the 3rd of the month, although social security says about 75% of recipients of payments now get them by direct deposit. That's because our people worked so hard to convince their senior citizens it was the best way to do it. It really is a success story about our marketing efforts.
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 10, 9/98
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