More than 500,000 people are now receiving their Social Security and Supplemental Security Income payments through prepaid debit cards, according to figures released Tuesday by the Treasury Department's Financial Management Service.

The agency began offering the Direct Express MasterCard-branded card last year. Observers have predicted that recipients of Social Security benefits could eventually become the single largest group using open-loop prepaid cards.

But consumers who are accustomed to receiving benefits by check will continue to resist converting to a prepaid card, one analyst said.

The card is aimed mainly at the approximately 4 million people who receive federal benefit checks and do not have bank accounts.

David Lebryk, the Financial Management Service's commissioner, said the cards have helped the agency meet both its goals: serving the unbanked and reducing the costs of issuing checks.

"Those are two things we feel very strongly about and think are important," he said.

Sending a check costs between 98 cents and $1, while a direct deposit into a card account costs about 12 cents, Lebryk said.

The cards were introduced in April of last year on a rolling basis. The initial focus was on the South, largely because of the potential impact of the hurricane season on the region. The agency then expanded the program to about eight to 12 states per month until the cards were available nationwide.

"The primary purpose for that was we really tried to make sure we had the ability to deliver people's benefits payments in a safe, secure way," Lebryk said.

William H. McCracken, the chief executive of Synergistics Research Corp., said the agency may need to change its marketing strategy to convince more people to use the cards.

For example, a recent letter sent to Social Security recipients highlighted the start of the hurricane season, as well as the wildfire season in the West, as reasons to sign up for the card; those warnings fail to connect with many recipients, McCracken said.

"I don't think that will resonate with consumers, particularly the farther you get away from a natural disaster," he said.

Instead, McCracken said the government should continue to promote the safety, convenience and low cost of the cards. "That's what they need to be focusing on to help overcome the resistance consumers have to receiving benefits a different way."

As of midyear the agency had deposited more than $1.7 billion in Social Security benefits, Lebryk said. The average load is $640. Comerica Bank of Dallas, issues the cards.

Recipients receive one free automated teller machine withdrawal in the United States for every card deposit. Additional withdrawals cost 75 cents.

Cardholders can also receive surcharge-free ATM access at approximately 50,000 machines nationwide operated by Comerica and other financial companies and ATM networks.

Point of sale transactions are free, and there is no cost to enroll.

Recipient satisfaction is very high, according to a recent survey by the agency. Of 614 users polled, 95% said they are satisfied with receiving their benefits through the card and 86% said they would recommend it to family members and friends.

Lebryk said a large marketing campaign involving senior citizen groups, law enforcement agencies and some financial companies helped recipients understand how the cards work.

"We're quite pleased with the initial response and we believe the level of satisfaction with the card will speak loudly and encourage others to sign up with the card," he said.

As the department looks for other ways to reduce the costs of paper checks, Lebryk said the card holds a lot of promise for other areas such as the Department of Veterans Affairs, which provides patient care and federal benefits to veterans and their dependents.

"We'll continue to look at other opportunities where we can use the card," he said.

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