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Banking: Government Check-Cashing Issues

GGD-89-12 Published: Oct 07, 1988. Publicly Released: Oct 07, 1988.
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Highlights

Pursuant to a legislative requirement, GAO studied the difficulties recipients have in cashing government checks, focusing on: (1) banks' check-cashing policies; (2) nondepositors' options for cashing government checks; (3) characteristics of recipients who do not have bank accounts; and (4) government responses to check-cashing issues.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
If Congress determines that recipients of certain government checks should not bear costs associated with the cashing of government checks or should be assured of a low-cost option, Congress may wish to consider encouraging methods that utilize plastic cards and electronic funds transfer technology.
Closed – Implemented
Treasury has established the Electronic Benefits Transfers (EBT) project to explore electronic card benefit payment approaches. Program testing began in November 1989. The goal for full implementation is 1995, with estimated savings of $26 million a year. The food stamp payment pilot program using magnetic cards was activated. FMS is holding discussions with SSA to develop an approach to implement EBT payments for SSA recipients nationwide.
Congress may wish to consider requiring the Department of Agriculture, the Department of Health and Human Services, and the Department of the Treasury, in consultation with state and local governments and banking and consumer groups, to assess the present delivery methods for all government benefits and to seek to develop coordinated delivery systems that would better meet the needs of recipients as well as reduce governmental delivery costs.
Closed – Implemented
Treasury has established the EBT project to explore electronic card benefit payment approaches. Program testing began in November 1989. The goal for full implementation is 1995, with estimated savings of $26 million a year. The food stamp payment pilot program using magnetic cards was activated. FMS is holding discussions with SSA to develop an approach to implement EBT payments for SSA recipients nationwide.

Full Report

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Topics

Bank depositsCash managementCheck disbursement or controlDisadvantaged personsFeesIncome maintenance programsLending institutionsMonetary policiesSocial security benefitsWelfare benefitsSupplemental security income