# Presentation: 341406

## Dallas Agency Forum 

Tim Kanaley 
Program Manager
Financial Management Service

- Tim Kanaley
- Program Manager
- Financial Management Service

**Issuing Federal Payments Using the U.S. Debit Card Program**

**August 15 &16, 2007**

## Agenda

- Defining a Debit Card
- Explaining US Treasury Department’s Role in Debit Cards
- U.S. Debit Card Overview
- How Debit Cards Are Being Used in Federal Space
- What will be Happening for the US Debit Card over the next Year

## What is a debit card?

- Offline “signature” debit
- Runs on major card association networks, e.g. Visa CashTM
- PIN or signature
- Used anywhere your credit card is:  over the phone, internet, etc.
- Online “PIN” debit
- Uses the electronic funds transfer (EFT) switches as its transaction backbone through the ATM network
- PIN-only:  adds a level of security
- Used only at locations that have a PIN Terminal
- Magnetic stripe not a chip
- Debit to a checking account
- Prepaid – debit to funds pre-funded into an account
- Card names:  declining balance, payroll, gift, stored value
- It’s popular! Debit card usage has grown at an annual rate of 23.5 percent.

- Source: The 2004 Federal Reserve Payments Study — Analysis of Noncash Payments Trends in the United States: 2000–2003, published December 2004

## U.S. Debit Card Overview

**Notes:**
I’d like to welcome Brian Feehely. Brian is with JPMorgan Chase’s Treasury Services Public Sector team and is focused on serving the needs of Federal Government clients. 
Today, Brian will begin the overview of the US Debit Card program by giving us a brief summary of debit cards.

## Background of the U.S. Debit Card

- Started in 1998 as a U.S. Treasury  pilot and  launched as a full program in 2005
- JPMorgan Chase provides the following services: cards, training, operations, and customer service
- 24 deployments by 20 agencies
- Delivers recurring or nonrecurring payments to individuals
- Versatile, widely accepted financial product (specific or general use)
- Not a credit card

## Key features of the U.S. Debit Card

- Web-based platform that enables agencies to:
- Assign various roles
- Activate and deactivate cards
- Fund cards
- Track card usage (optional)
- Access online reporting

## Key features of the U.S. Debit Card

- Distribution is immediate in person or by mail
- Cards can be embossed with a name or without (blank card stock ready to issue)
- Cards can be activated on-the-spot or by batch file
- 24 x 7 surcharge-free access to funds through Chase and AllPoint ATM networks
- Access to customer service online or via toll free number

## How has the card been used?

- Department of Agriculture
- Foreign Agriculture Service
- Forest Service
- National Agricultural Statistics Service
- Department of Commerce, U.S. Census Bureau
- Department of Defense, U.S. Southern Command
- Department of Energy, Bonneville Power
- Department of Health & Human Services, National Institute of Health
- Department of Homeland Security
- Citizenship and Immigration Services
- Immigration and Customs Enforcement
- Transportation Security Administration
- Department of Interior, Office of International Affairs
- Department of Justice, U.S. Marshals Service
- Federal Trade Commission
- International Boundary and Water Commission
- Peace Corps
- Holocaust Museum

## Benefits to Federal Agencies

**Benefits to Federal Agencies**

- Reduces dependence on “cash” or checks
- Enhances agency’s financial control (audit trail)
- Operational efficiencies, streamlining and cost savings
- Reduces paper work
- Supports and enhances agency mission
- Moves agency to an EFT environment

## Funding the U.S. Debit Card

- Cards can be funded via ACH before or after it is physically issued to the cardholder

- _Option 1:  By Funding Account_

- _Option 2:  Directly to Card_

## The Direct Express Card:  Debit Card for Benefit Recipients

- Electronic Funds Transfer (EFT) solution for the unbanked
- Cost-effective payment mechanism for the Government
- Can be cost-effective for the beneficiary
- Safe, secure payment mechanism
- Increased use and acceptance of debit card as benefit payment mechanism by states and other countries

## Direct Express Card Pilot

- At the end of December 2006, FMS sent direct mail to 35,000 Social Security (SSA) & Supplemental Security Income (SSI) check recipients in Chicago and southern (rural) Illinois
- As of August 2007, more than 2,595 enrollees
- Pilot will run for one year
- FMS will explore including other benefit types in the pilot, as well as expanding the geographical area

## Card Features

- Individual FDIC-insured, Reg E compliant, non-interest bearing accounts set up for each cardholder
- MasterCard-branded with a magnetic stripe supporting PIN- or signature-based transactions (ATM/POS)
- Reloadable with Federal benefits, not personal funds
- No monthly paper statements; account balance info by phone, ATM, on-line, or upon cardholder’s request.
- 24/7 phone and on-line customer service by JPMorgan Chase, Treasury’s financial agent

## Enrollment

- Toll-free telephone enrollment at JPMorgan Chase (JPMC)
- JPMC sends routing number & account number (ENR) directly to SSA
- JPMC sends card and materials to beneficiary
- Cardholder activates card by calling a toll-free number
- Other enrollment options may be added in the future
- FMS will have no access to cardholder demographic or transaction information, except on a statistical basis

## Cardholder Fees

- No monthly fee
- One free ATM withdrawal per month; $2.50 per additional withdrawal
- Free POS
- Free telephone/online customer service
- Additional fees for other transactions

## Disbursement

- Same as standard EFT
- SSA sends payment certification to FMS; FMS disburses payment via ACH
- Routing number/account number stays the same even if card number changes
- Interface with Treasury Offset Program (TOP)
- Reclamations

## Consumer Education

- FMS will develop plan to educate beneficiaries on proper & cost-effective use of card
- Minimize cost of card to cardholder
- Minimize overdrafts
- Minimize losses due to unauthorized use or fraud
- Maximize effective and efficient use of customer service options

## Pilot Evaluation

- Cost of card to Treasury
- Cost of disbursing a payment (check vs. EFT vs. debit card)
- Other costs?
- Cost of card to beneficiary
- Customer satisfaction
- Card usage – ATM vs. POS

## What’s in the Cards for the Future?

## The Future . . . 

- Direct Express Roll Out across the United States and overseas
- PODCASTS – see our website for testimonials to how to account for cards
- Product Development Days
- Seeking interested agencies for cellular phone transactions or “mobile payments”
- Seeking agencies interested in new funding techniques – please see me at end of conference for available days in August
- Additional banks for select agencies that cannot have their requirements met by current US Debit Card provider
- US Marshals – online accounting entries, one daily aggregated payment, no accounting changes