The Financial Management Sere (FMS) of the U.S. Department of the Treasury provides a program for receiving federal payments that is safe, convenient and economical. It's called the Direct Deposit Program. The Direct Deposit Program allows the federal government to make payments by electronic funds transfer (EFT), through the automated clearinghouse system, directly to financial institutions for deposit to a checking or savings account.
In January 1976, FMS made its first use of the EFT system to issue Social Security benefit payments in the state of Georgia. That year, 660,000 payments were made by EFT. Currently, approximately 27.1 million payments per month are being made by EFT. This represents approximately 53 percent of all benefit payments made by the federal government.
Now's a Good Time
The program has grown steadily. The recently revised Title 31 Part 206 of the Code of Federal Regulations requires federal agencies to use the most cost effective and efficient disbursement method available. This regulation, together with recently enacted legislation requiring all new federal employees and retirees to use direct deposit to receive their salary or annuity payments, will have a significant positive impact on the rate of increase in participation and makes now an ideal time to actively market the program in your bank's service area. The new legislation takes effect this month.
By encouraging your customers to receive their federal payments by direct deposit, you are providing them with a safe and convenient banking service. Direct deposit eliminates the hip to your financial institution to cash or deposit a check, and it eliminates the possibility of the check being lost or stolen.
In addition, the program provides definite benefits for you, the financial institution. It reduces lobby congestion, improves customer service, and increases the use of other services. But, best of all, an EFT payment costs less to process. Studies have revealed that it costs 59 cents to process a mail deposit and 24 cents to process a check cashed over the counter. But, it costs only 7 cents for financial institutions to process an EFT …