The Social Security Administration and the Treasury Department's Financial Management Service have developed a system to deliver Social Security benefits electronically to U.S. expatriates.

Designed to reach retirees in developing countries with unreliable post offices, the electronic benefits transfer system utilizes the Cirrus and Citibank automated teller machine networks.

Federal officials characterized the arrangement, now entering a pilot phase in Argentina, as the first cross-border EBT system for recurring consumer payments. The framework is similar to a Social Security delivery system using debit cards and automated teller machines that Citibank operates in Texas.

Michael Johnson, the Social Security Administration's director of payments and recovery policy, said EBT can eliminate the fraud and delivery costs of paper checks sent overseas.

"Every month a bag of mail containing our Social Security checks gets stolen and literally ends up being cashed all over Europe or Asia," Mr. Johnson said. "We think EBT gets around that."

In the pilot, Social Security recipients can voluntary sign up to have debit-only transaction accounts. Treasury will disburse monthly payments into the accounts via the automated clearing house network.

Beneficiaries can get their funds at ATMs in U.S. dollars or Argentine pesos.

The program will run under existing contracts between the Financial Management Service, the arm of the U.S. Treasury that provides cash management services to various agencies, and New York-based Citibank, the program's servicing bank.

The Social Security Administration delivers monthly payments via direct deposit to beneficiaries in 32 countries, mostly to developed nations in Europe, and the Americas.

Direct deposits into local bank accounts - accepted by a majority of Social Security recipients in the U.S. - are not feasible to countries with small numbers of recipients.

With the debit card, officials said they hope to attract up to 90,000 beneficiaries in nations with less developed banking or postal systems.

John Simeone, director of product management at Citicorp, characterized the Argentine pilot as an extension of the Texas EBT program run by the bank since 1992. The pilot will indicate "if this delivery mechanism works well outside the U.S.," Mr. Simeone said.

Social Security officials said they believe all its 2,500 Argentine beneficiaries will sign up. Checks are currently delivered via a system of private couriers that, Mr. Johnson said, charge a Social Security recipient $5 to $8 each time a check is delivered.

Depending on the success of the Argentine pilot, the administration would extend direct deposit to other countries. Next would likely come the Philippines, where there are 16,000 recipients, and Mexico, with 60,000.

Mr. Johnson laid out the plan last week during the National Automated Clearing House Association's annual conference in New Orleans. Other cross- border initiatives under the national association's aegis are expected to follow.

The clearing house group's Cross Border Council and Canadian officials will vote later this month on a set of rules for international ACH payments.

The rules will be simple at first - a bare-bones approach based on the systems' commonalities and limited to relatively simple consumer credits.

Eventually, Nacha hopes the cross-border system evolves to include other payment types and more countries.

Thomas J. Stecher, executive vice president of Hawkeye Bank of Dubuque, Iowa, and chairman of Nacha, said an international payments mechanism for recurring, low-value payments will facilitate global trade.

"We want to develop standards to ease financial transactions between countries," Mr. Stecher said. "We are very anxious to work with various departments and agencies and governments to help develop these standards."

To achieve a true cross-border system, Nacha has been touting a "gateway operator" concept. Banks in each participating country would send and receive payments using a single standard corresponding with gateway banks in other countries.

These operators would perform the necessary foreign exchange conversions, translations, processing and settlements.

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