By Bernie Becker - 01/13/11 04:06 PM EST
“This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures,” Neal Wolin, deputy Treasury secretary, said in a statement.
The pilot program, which was announced in September to test out a national effort to reduce federal reliance on paper checks, is slated to cost Treasury roughly $1.5 million. The
federal government currently spends roughly $40 million a year mailing out paper
checks for benefits, tax refunds and for other reasons, and spends around $1
for each paper check it sends. Direct deposit, by contrast, costs the
government roughly 10 cents per payment.
Moving forward, the department will look to evaluate product features and fee structures by offering debit cards with different features to the program’s participants.
The Wall Street Journal reported that half of the cards offered in the pilot program will come with a $4.95 monthly fee, while the rest would carry no fees.
The pilot program will be managed by Green Dot Corp., a prepaid financial services company, and the debit cards will be issued by Bonneville Bank.
The Treasury Department also announced Thursday that, in a companion program, it was encouraging some of the 1.7 million workers who use payroll cards to have their tax refund directly deposited on those cards.
Treasury is among the government agencies trying to reach out to individuals who have spotty access to bank accounts. The department also is currently working on a program that would send federal benefits to most recipients by direct deposit.