Electronic Payments: Many Programs Electronically Disburse Federal Benefits, and More Outreach Could Increase Use

GAO-08-645 Published: Jun 23, 2008. Publicly Released: Jun 30, 2008.
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Traditionally, federal agencies made benefit payments by paper check, but they faced increased pressure to reduce costs and increase the convenience, security, and timeliness of payment delivery. In response to a 1996 congressional mandate, the U.S. Department of Agriculture's Food Stamp Program implemented Electronic Benefit Transfer (EBT) to distribute food stamps. According to agency evaluations, EBT has reduced program costs and fraud and offered recipients a quick, secure way to receive payment. These results spurred interest in using electronic payment methods for other benefit programs. GAO was asked to report on (1) the extent to which federal benefit programs are using electronic payments, and factors agencies consider for their use and (2) options for increasing the use of electronic payments, particularly the Department of the Treasury's (Treasury) actions to that end. GAO surveyed federal benefit programs identified from two federal databases; reviewed documents, reports, and studies on electronic payments; and interviewed federal and state agency, industry, and consumer representatives.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury To help Treasury achieve its goals of increasing the use of electronic payments and moving to an all-electronic government, the Secretary of the Treasury should direct the Commissioner of Financial Management Service to consider developing a process for conducting outreach to federal agencies on a more regular basis, with the goal of identifying opportunities for increasing the use of electronic payments. For example, Treasury could meet with agency Chief Financial Officers, or their designees and with staff from smaller agencies, on a semiannual or annual basis to discuss challenges that agencies face in moving to electronic payments and to identify actions that Treasury and agencies could take to facilitate the transition to electronic payments.
Closed - Implemented
Treasury has developed plans and taken actions to implement the GAO recommendation to increase use of electronic payments by conducting outreach to federal agencies on a regular basis. First, Treasury officials participated in scheduled meetings and conferences, including the annual Payment Management Customer Conference where discussions were held to expand knowledge of the Direct Express Card and the US Debit Card for benefit payments. Second, Treasury held regular discussions with their Regional Financial Centers' (RFC) Customer Advisory Board to promote electronic benefit payments at federal agencies and RFC customer agencies, such as AARP. Third, Treasury holds quarterly meetings with its largest benefit agency, the Social Security Administration, where there is a constant focus on electronic processing of benefits, as well as regularly scheduled meetings with officials from the Veterans Administration and the Office of Personnel Management. Data provided by Treasury show an increase in the number of enrollments in its Direct Express initiative. Lastly, Treasury created a new Office of Financial Innovation and Transformation that supports the idea of an all-electronic Treasury, which includes encouraging electronic benefit payments for all federal programs.

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