The Treasury Department announced Tuesday it will move to electronic payments instead of checks for federal benefits and nontax payments.
The agency said anyone applying for benefits on or after May 1, 2011, would receive their payments electronically. People who already receive paper checks will be required to switch to direct deposit by March 1, 2013.
"Millions of additional retirees, veterans and other Americans will also receive their money in the safest, most reliable way — electronically," said Richard L. Gregg, the Treasury's fiscal assistant secretary, in a press release.
Today, 80% of benefit recipients use direct deposit. Gregg said that besides adding security, the shift to electronic payments would save taxpayers $120 million in costs associated with paper check payments.
Benefit recipients have the option of direct deposit into a bank or credit union account of their choice or on to a MasterCard Inc. card.
Roughly 1.5 million beneficiaries have signed up for the card since it was introduced in 2008.