Check cashing companies are feeling so threatened by electronic benefits transfer technology that they are lobbying policymakers to include them in the new systems for distributing welfare, food stamps, and similar payments.
Check cashers currently have a role in many states' distribution of public assistance. But electronic benefits transfer, known as EBT, bypasses these outlets by relying on automated teller machines and point of sale terminals.
"The cost-effective systems that already exist and are already successfully meeting the needs of distributing the monies should not be discarded without any proof that the electronic system is better," said Henry F. Shyne, executive director of the National Check Cashers Association, which represents 2,500 check cashers in 35 states.
The group may have succeeded in delaying the award of a major EBT contract in the Northeast.
The Northeast Coalition - Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont - had released a request for proposals in June, expecting to name a winning processor by mid-November.
Coalition officials now say they hope to announce the contractor by the end of this month.
They say the five bidders - Citibank, Chemical Bank, Fleet Financial Group, NationsBank, and Utah's First Security Corp. - are taking the extra time to complete cost estimates and document that their numbers of access points will equal those available in the current system, a provision that is required under the terms of the request for proposals.
The check cashers say, however, that the states have come under pressure from legislators who have held hearings to collect testimony from groups representing benefit recipients, as well as the check cashers.
"In New York, at least, the state legislators are very aware of the access issues," said Joseph Coleman, president of the 340-member Check Cashers Association of New York and vice president of Rite Check Financial Service Centers in the Bronx.
"How do these bidders expect to serve these recipients when they do not have the infrastructure in the communities that they are expected to serve?" Mr. Coleman asked.
He pointed out that while check cashers have plenty of stores in the inner-city neighborhoods where most benefit recipients live, ATMs are not so prevalent.
The check cashers claim that the issue goes beyond New York. In most states, said Stephen H. Wolf, chairman of the association, check cashers are the principal distributors of government benefits. This role would be diminished, or perhaps completely lost, under the terms of most EBT contracts signed with banks.
If recipients are forced to use ATMs, he said, they will have to travel beyond walking distances to find them - a problem for people without cars. Mr. Wolf, who is also treasurer of Pay-O-Matic Corp. in Syosset, N.Y., also said customers may abandon the check cashing outlets, driving them out of business.
The check cashers vow to continue pushing to retain what they view as their vital role in benefits distribution. Mr. Coleman and Mr. Wolf, for example, are scheduled to testify at another New York State legislative hearing on Jan. 25.
