US Treasury to introduce pre-paid welfare card

US Treasury to introduce pre-paid welfare card

The US Treasury Department is introducing a pre-paid debit card that will be used to deliver benefit payments to social security recipients.

According to a Wall Street Journal (WSJ) report, the US government has selected Comerica Bank as the card issuer for the programme, which will see social security recipients that don't have a bank account given a debit card - called Direct Express - loaded with their welfare payments.

The pre-paid card market is viewed as a key access point for delivering financial services to the unbanked. As many as 40 million US households either have no bank account or make little use of banking services, according to research conducted by Chicago's Center for Financial Services Innovation.

The card is being introduced to provide benefit recipients with faster access to money and eliminate some security problems, like stolen cheques, says the report, but there are some extra fees associated with the card-based scheme.

The new pre-loaded debit card is part of a broader effort by the US Treasury to move to electronic payments. In some states loaded debit cards are already provided to recipients of unemployment benefits or child support payments, says the report. Also, in 2005 the Federal Emergency Management Agency offered debit cards loaded with emergency funds to victims of Hurricane Katrina.

The UK government changed the way payments are made to social security recipients in April 2003 and switched the payment of all welfare benefits to card-based accounts.

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