Electronic Payments To Start January 1, 1999-Maybe

Now that we've really started to pay attention, and prepare all our friends and customers who are on social security for the Electronic Benefits Transfer (EBT) program that is supposed to take effect in 1999, the government may decide to delay the start of the procedure.

If you remember, we reported before about the task we are facing of finding a way to get government payments into the hands of the 10 million or so individuals in the United States who don't have accounts at any financial institutions. Our government can save millions of dollars by getting these payments out electronically, instead of in the form of checks.

No problem with those who are already our customers, who have accounts that can receive these direct deposits. And any individuals who do have accounts will still be required to accept direct deposit starting by the cut-off date.

But John D. Hawke, Jr., under secretary of the Treasury, was quoted as saying there are concerns about whether it is going to be possible to get all the payments on-line by January 1, 1999 to those people without accounts.

Part of the problem is Treasury's reluctance to provide banks with information for how much could be charged for serving the "unbanked", (if anything), how much liability and responsibility would be that of the servicing financial institutions, and details on how they expect the system to work. The lack of information and answers has kept the financial industry from proposing methods and systems that would be efficient and workable. Mr. Hawke said that they are putting together a proposal that will solicit bids for financial institutions to provide the service. The proposal also includes waivers for consumers who want to continue receiving paper checks because of financial hardship or physical disability. Treasury says they may "exempt" some from the EBT program.

So federal payments may-or may not-be totally electronic by the end of 1998.

Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 10, 8/97