U.S. Government Accountability
Office (GAO)
GAO’s Report on Electronic Disbursement of
Federal Benefit Payments (GAO-08-645)
Presented by Kay Kuhlman, Assistant Director
Financial Markets and Community Investment, GAO
The Next Frontier in Public Benefits: Electronic Benefit Cards
Webinar on February 3, 2011
For more information, contact Kay Kuhlman, (202) 512-8678; kuhlmank@gao.gov
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About GAO
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Why was GAO asked to do this study?
• Electronic Benefit Transfer (EBT) was devised in the 1980s to
meet the needs of the USDA’s Food Stamp Program in which
federal benefits were electronically disbursed to eligible
recipients.
• Agency evaluations had found that EBT helped to significantly
reduce fraud and offered recipients a quick, secure way to
receive payments, while allowing agencies to reduce program
costs.
• These positive results—and the potential for duplicating them in
other benefit programs—prompted the Ranking Member of the
House Committee on Oversight and Government Reform to
request GAO to conduct a study on the extent to which federal
programs are using electronic payment methods.
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Objectives and Scope of Study
• To what extent are federal benefit programs using electronic
payments?
• What factors do agencies consider when implementing or
using electronic payments?
• What are the potential options for increasing the use of
electronic payments?
• The study focused on federal benefit programs but included
information on states’ efforts in using electronic payments.
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Methodology
• Surveyed 45 federal benefit programs from federal agencies
including USDA, Labor, Veterans Affairs, Health and Human
Services, Social Security Administration, and Bureau of
Indian Affairs
• Reviewed documents, reports, and studies on electronic
payments
• Interviewed federal and state agency, industry, and
consumer representatives
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Increase in Use of Electronic Payments in the
United States
• Annual Number of Electronic vs.
Check Payments in the United
States, selected years
(1995, 2000, 2003, 2006, 2009)
• Sources: 2007 and 2010 Federal
Reserve Payments Studies
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Percentage of Payments Made Electronically for
18 Programs We Surveyed
Note: Table does not include federal benefit programs administered by states.
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Agencies Consider Various Factors When Implementing
or Encouraging Use of Electronic Payments
• Financial burden to recipients, such as transaction fees
• Recipient characteristics, such as disabilities
• Program characteristics, such as non-cash benefits
• Implementation costs
• Fraud and security risks
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Options Agencies Have Considered to Increase
Use of Electronic Payments
• Mandating that recipients receive benefits electronically
• Making electronic payment the default option upon
enrollment
• Promoting electronic payments through public outreach
• Piloting electronic distribution programs
• Using electronic payment cards in new ways
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Transition from Electronic Benefits Transfer
(EBT) to Electronic Payment Cards (EPC)
• As EBT has become more widely accepted and the use of
debit card technology has increased, state agencies
administering federal benefits have explored other types of
EPCs to further increase the use of electronic payments.
• Some states have explored the use of hybrid cards that
involves the use of both magnetic stripe and integrated chip
technology.
• Some states have considered using a co-branded EBT card
that would include a VISA or MasterCard logo.
• In 2008, Treasury launched the Direct Express debit card
(bearing the MasterCard logo) for Social Security and SSI
recipients.
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GAO on the Web
Web site: http://www.gao.gov/
Contact
Chuck Young, Managing Director, Public Affairs, youngc1@gao.gov
(202) 512-4800, U.S. Government Accountability Office
441 G Street NW, Room 7149, Washington, D.C. 20548
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