Changes are soon coming to how the Social Security Administration issues payments.
According to the agency, paper checks will no longer be issued for benefit payments starting Sept. 30.
“This change is part of a broader government-wide initiative to modernize payment systems and enhance service delivery,” the agency said in an alert to beneficiaries in July. “By moving to electronic payments exclusively, we aim to improve efficiency, security, and ensure beneficiaries receive their monthly benefits promptly.”
The shift will impact anyone who has not yet switched to electronic payment methods, which the Social Security Administration said is less than 1% of beneficiaries. Anyone still receiving paper checks is being urged to enroll in direct deposit or opt for the “Direct Express card” in order to receive their benefits on time.
The move was first announced as part of a March 25 executive order, titled “Modernizing payments to and from America’s bank account.” In it, President Donald Trump directed all federal departments and agencies to stop using paper checks and switch to electronic payments by September, citing “unnecessary costs, delays and risks of fraud lost payments thefts and inefficiencies.”
“Mail theft complaints have increased substantially since the COVID-19 pandemic,” the order said. “Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT).”
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According to finance experts, electronic payments come with benefits, including faster and more secure payments, and a lower cost. NBC 5 Responds reported that it costs approximately $2 to $4 to issue a paper check and then $1 to $2 to receive it, compared to a 50-cent electronic transaction.
The change also comes as a growing list of retailers, including Target and Nordstrom, announced they would no longer accept checks as a form of payment.
Similar moves have been made in years past. In 2011, the U.S. Department of Treasury said anyone newly applying for Social Security, Veterans Affairs or other federal benefits must select an electronic payment method, saying paper checks will “no longer be an option.”
In 2010, the Treasury Department published a final rule to gradually eliminate paper checks for federal benefit payments.
According to Treasury Department, issuing a paper check costs about 50 cents, whereas an electronic funds transfer costs less than 15 cents.
“This shift could save the federal government millions of dollars annually,” the Social Security Administration said.
Those who currently receive checks will need to set up one of the following:
People who currently receive paper checks have two convenient options to receive their Social Security payments electronically:
- Direct Deposit: Beneficiaries should enroll in direct deposit with their financial institution. Payments can be deposited directly into your checking or savings account.
- Direct Express® Card: For people without a bank account, the Direct Express card is a prepaid debit card designed specifically for federal benefit payments.
from NBC Chicago https://ift.tt/zxqrDlc
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