The US Treasury is to switch off cheque payments to all citizens currently receiving federal benefit and non-tax payments by the end of the first quarter 2013, with new benefit recipients forcibly moved to electronic direct deposits from May 2011.
Treasury secretary Richard Gregg says the annual cost to government of processing and sending out paper cheques currently runs at $120 million per annum. The switch to electronic payments "will save Social Security $1 billion over the next 10 years", he says.
A recent study by the Federal Reserve showed that last year more than three-quarters of all US noncash payments were made electronically, with around 20 billion more e-payments made in 2009 than 2006, as consumers increasingly turn away from paper cheques.
Benefit recipients will 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.
So far, more than 1.5 million beneficiaries have signed up for the Direct Express card since it was introduced in 2008.