As the feds get serious about ditching paper checks, a few hang on
Feb 24, 2013 (Billings Gazette - McClatchy-Tribune Information Services via COMTEX) --
Complying with Go Direct
Beginning March 1, the U.S. Treasury is paying the following federal benefits electronically:
* Social Security
* Supplemental Security Income
* Veterans Affairs
* Railroad Retirement Board
* Office of Personnel Management
* Black lung victims
* People older than 91 who were born before May 1, 1921.
* People who live in remote areas without adequate banking institutions.
* People with a mental impairment who would have a difficult time using electronic payments.
To enroll online, go to: www.GoDirect.org or call the U.S. Treasury Electronic Payment Solution Center at 800-333-1795. You can also contact a local financial institution.
Source: Federal Reserve Bank website.
For nearly three decades, Marie Kautz has been getting her Social Security retirement checks in her mailbox, and that's the way she likes it.
"I didn't want direct deposit. I want to see the money," said the spry 90-year-old, who ate lunch at the Billings Senior Center earlier this week before driving herself to a couple of stores to shop.
Kautz was raised in the 1920s and '30s on a North Dakota farm without a telephone. She is just the client that Walt Henderson, director of the Go Direct campaign at the U.S. Treasury Department, wants to win over.
After years of trying to get people signed up for direct deposit, beginning this March 1 the federal government will no longer mail out paper checks to pay Social Security, Social Security disability or veteran benefits.
Six percent of Montanans still wait for the mail carrier to deliver their federal checks. Henderson wants to dispel what he called e-payment misconceptions, including the idea that people have to use computers to get their money.
"All we're doing is changing the check in her mailbox to a direct deposit in her account," Henderson said, talking about people like Kautz. "She can continue to do business the way she always has."
Kautz has been swimming at the YMCA in Billings since women were allowed to join nearly 60 years ago, and she's had a checking account just as long. But she doesn't own a computer and shies away from e-banking. This traditionalist likes paper checks.
"I pay my heat. I pay my electricity. I pay my soft water, my phone and then I have good receipts," she said.
The Treasury is granting some exceptions to Go Direct, including anyone born before May 1, 1921, a birthday deadline Kautz narrowly missed.
Since Treasury started its paperless campaign, at least 93 percent of participants now use direct deposit, Henderson said, an improvement of 8 percent in two years.
Despite a website stating "It's the law," Henderson said he won't be rigid about enforcing the March 1 deadline.
"We won't stop her check," he said. "We will continue to reach out to her by mail to see if we can offer some assistance."
When asked when Treasury will cut off paper checks completely, Henderson wouldn't name a date.
In lieu of direct deposit to a bank account, about 3 percent have chosen the Direct Express prepaid debit card, Henderson said. Treasury deposits money directly to the card, which can be used anywhere a standard debit Mastercard works. Card holders can call a toll-free number to check their balances.
The divorce from paper checks has largely occurred.
"We don't even handle federal checks much anymore," said Carla Meade, who manages customer services at First Interstate Bank.
Other officials at Billings-area banks, nursing homes and senior service agencies also expect March 1 to be a nonevent.
"There's always going to be a few unaware, but it's been going on long enough," said Connie Holmes, vice president of operations for Stockman Bank. "And it's pretty easy to get them signed up."
Nearly 10 million American households, about 8 percent, shun bank accounts altogether, according to a study released last year by the Federal Deposit Insurance Corporation. That number jumps in low-income households, defined as making $15,000 per year or less, where 28 percent live without an account.
Another one in five Americans are "underbanked," meaning they have a checking or savings account but rely on alternative finance methods. These include cash, payday check cashing, pawn shops, tax refund anticipation loans and prepaid debit cards.
More than 18 million baby boomers are expected to retire in the next five years, and effective May 2011 new Social Security enrollees had to sign up for e-deposits.
Eliminating 5 million Social Security checks each month is expected to save about $1 billion over the next decade. Printing a paper check costs the federal government a dollar. An e-payment costs a dime.
Older Americans are more likely to live without cyber banking and Montana is a grayer state than most.
Americans age 85 or older make up about 1.6 percent of the population.
In Montana, seniors 85 or more make up 2.1 percent of the population, according to Barbara Wagner, senior economist for the Montana Department of Labor and Industry. And Yellowstone County has 3,355 people in that age group, or 2.2 percent.
Despite having more seniors, Montanans are slightly more compliant than the national average in converting to direct deposit, Henderson said, a percentage point better.
Food assistance and other federal and state benefits are increasingly paid electronically.
Consumers find it more and more difficult to pay by check. Businesses increasingly want consumers to swipe or buy online and more restaurants and stores are banning checks outright.
Try writing a check at a grocery store and watch shoppers lined up behind you looking askance about their longer wait. And travelers' checks are a relic of the past, having followed the pathway to plastic.
FIB senior vice president Bruce Parker said the first discussion about checks going away began in the 1970s when he began working in banking.
"But that trend didn't get serious until about five years ago," he said.
Internet banking took about as long to get established.
"If you're in the middle of Timbuktu, you can do your banking over the Internet and not go to the bank," he said.
The next rage is banking by mobile phone.
About a year ago, Walmart Corp. stopped paying its employees with traditional checks. Employees can use direct deposit, a debit card or write their own paycheck after calling the company to get their net pay.
"The employee writes the check and we cash it," said Heights store manager Mike Ray.
Treasury's Henderson argued that electronic payments also are more secure.
"If I snatch a check out of your mailbox, the check goes cold," he said. "It can't be traced."
Treasury's e-payments can be tracked if there is a problem, he said, and they aren't sent over the open Internet.
"They ride very secure rails between the Treasury, the Federal Reserve and the banks," Henderson said.
But AARP, among other organizations, disputes that argument, saying Direct Express cards can be compromised, just like regular credit or debit cards. And the cards come with fees.
Users pay no activation or monthly fees, but they get just one free withdrawal per month at selected ATMs. Subsequent withdrawals cost 90 cents at approved ATMs or several dollars at other ATMs, according to CreditCards.com
Meanwhile, Kautz knows her days of waiting for her monthly Social Security check are numbered.
"I know I'll have to change," she said. "I just don't want to."
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