Treasury Extends Direct Deposit, Phasing Out Paper Checks
The U.S. Department of the Treasury has issued a final rule to extend the safety and convenience of electronic payments to all Americans receiving federal benefit and non-tax payments. Anyone applying for benefits on or after May 1, 2011, will receive their payments electronically, while those already receiving paper checks will need to switch to direct deposit by March 1, 2013. The Treasury Department’s Go Direct® public education campaign will provide information to Americans about the change to how federal benefit payments are being delivered and make it easy for check recipients to switch online or by calling a toll-free helpline.
"Eight in 10 federal benefit recipients already use direct deposit, and now millions of additional retirees, veterans and other Americans will also receive their money in the safest, most reliable way – electronically," says Treasury Fiscal Assistant Secretary Richard L. Gregg. "This important change will provide significant savings to American taxpayers who will no longer incur the annual $120 million price tag associated with paper checks and will save Social Security $1 billion over the next 10 years."
After seeking public comment on the proposed rule issued in June 2010, federal regulations were changed to generally require all federal benefits including Social Security, Supplemental Security Income, Veterans Affairs, Railroad Retirement Board, Office of Personnel Management benefits and other non-tax payments to be made electronically. Benefit recipients have the option of direct deposit into a bank or credit union account of their choice, or into a Direct Express® Debit MasterCard® card account. More than 1.5 million beneficiaries have signed up for the Direct Express® card since it was introduced in 2008.
Treasury is launching a public education campaign to inform Americans about the rule change and to help them understand what they need to do to get their payments electronically, whether they already receive payments by check or will be applying for federal benefits for the first time soon. Current check recipients will receive information enclosed with their payments, and the national campaign will also include public service announcements, a newly redesigned website, www.GoDirect.org, ongoing financial literacy programming and partnerships with hundreds of national, regional and local organizations.
The National ACH Association (NACHA) has announced a few ACH rule changes that will become effective in September 2011. None of the changes are expected to have major impacts on most credit unions.
Among the changes are:
- New requirements for ACH debits used to collect return fees for certain checks and ACH debits that have been returned for insufficient or uncollected funds.
- Expansion of the Destroyed Check Entry (XCK) application to permit its use for certain damaged checks that cannot be imaged, or other check images that cannot be processed.
- Expansion of the Telephone Initiated Entry (TEL) application to permit its use for recurring consumer transactions.
Click here for all the details on these NACHA changes and the impacts to financial institutions.
