Forum on Benefits Transfer Started

Industry-Government Panel to Discuss Systems, Costs

The Electronic Funds Transfer Association has created a forum to discuss what electronic distribution of such government benefits as food stamps and welfare would cost and how it would affect payment system.

The Herndon, Va.-based interest group announced this month the formation of the the Electronic Benefits Transfer Exchange, a 47-member discussion group of bankers, technology vendors, and government officials.

Members of the group will gather in Washington four times next year to discuss problems and identify opportunities that would stem from a nationwide system of electronic payment of government benefits.

Goal Is to Reduce Losses

The U.S. government has long been a supporter of electronic benefits transfer. The Department of Agriculture hopes something like the direct-deposit system most banks offer could reduce the waste and fraud associated with distributing food stamps. Other agencies have similar hopes. Retailers like the idea because it would it provide prompt payment.

It is not as clear what financial institutions would gain. It comes as little surprise, then, that the banking industry does not seem eager to participate.

Part of the goal of the Electronic Funds Transfer Association's forum is to address the problems a bank would encounter of converting automated teller machines and other electronic banking tools to deliver government benefits.

Industry officials said such a forum can go a long way toward encouraging bankers to get involved in electronic benefits transfer.

"We are supportive of the goals of electronic benefits transfer, but we still have a number of reservations about its cost implications," said Anne Davis Janson of the American Bankers Association's retail payments services committee.

Many in the industry believe that it is time for bankers to express their concerns more concretely and take a more active role in shaping what the benefits transfer system would look like. The Department of the Treasury has been hinting for some time that if bankers refuse to get involved in the program, they may require banks to offer the service.

At issue for many financial institutions is who would pay for the one-time costs associated with systems conversion as well as the ongoing expense of maintaining communications links with merchants and government agencies.

In an attempt to address these concerns, the Treasury has initiated several pilot programs at a number of financial institutions, including the First National Bank of Albuquerque, N.M.

The Department of Agriculture is also working with several of the regional automated teller machine networks to evaluate the pros and cons of sending benefits through their communications links with banks.

In addition to the EFTA's forum, the American Bankers Association will hold an electronic benefits transfer symposium Oct. 29 in Washington. The Consumer Bankers Association in Washington has also addressed the subject with an indepth study.

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