Automated Clearing House Association and the Social Security Administration to promote direct deposit services. The marketing alliance is part of an effort to boost use of the automated clearing house network. As part of the initiative, senior officials of the Federal Reserve and Social Security will send letters to chief executive officers at many of the nation's banks asking for support of their direct deposit marketing efforts. The Fed also will take an active role in developing a new round of public service announcements in order to "raise public awareness and to stimulate more effort," said Paul Connolly, first vice president with the Federal Reserve Bank of Boston. "We hope we can be helpful, particularly in working with the local ACH associations and local banks in every reserve district," Mr. Connolly said. The new initiative is modeled after a similar program run by Nacha and the Fed for consumer electronic bill payments. Linda Garvelink, a senior director with the Herndon, Va.-based national clearing house, said the association hopes direct deposit services can be expanded beyond the usual Social Security payments and payroll deposits into travel expense payments, educational reimbursements, dividends, and pensions. "Despite the many benefits of direct deposit and direct payment, a more aggressive, comprehensive marketing and educational effort is needed to increase people's awareness," said Hank Bourgaux, a senior vice president with the Federal Reserve Bank of St. Louis. The new marketing effort also will promote a new service that lets banks send enrollment information to government agencies over the ACH network. Such transactions would be possible next September when a new ACH rule sponsored by the Social Security Administration takes effect. Michael D. Johnson, a director of payment and recovery policy with Social Security - which began offering direct deposit in 1975 - said the Fed's efforts to help them promote the use of direct deposit will be appreciated. "We are not Madison Avenue types, but we are enthusiastic," Mr. Johnson said. He said past efforts to promote direct deposit programs had received "very good support" from medium-size and smaller banks, but "we have not seen comparable levels" from larger banks. Roughly 27 million people, or 60% of all Social Security recipients, receive payments electronically. The federal agency must enroll around 350,000 new members every month just to maintain current rates of participation. In addition to the high turnover rate, the agency has been forced to contend with the growing burdens of disbursing monthly payments to an aging population. Mr. Johnson said as many as 80 million monthly payments will be made by the year 2020, which when the baby boom generation retires. "That's the demographic tidal wave that's bearing down on all of us," Mr. Johnson said. "I can't pay those people by check," he added. "I have no choice but to really try and push the hell out of direct deposit."
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