State studies move to electronic payment cards
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CCG's review of payments by state programs noted that paper transactions, such as checks, are inefficient for both the state and the recipient. The CCG estimates that a switch from paper checks to EPCs would save the state approximately $2 per check. It would also save clients from $7 to $15 per check in fees for check-cashing for those not using a bank, or for creating money orders with which to pay bills. While direct deposit has certainly reduced some of the costs of check-writing, 10 percent of the population either does not use a bank for financial services or has privacy concerns and requests paper warrants instead.
Two state agencies already are using EPC programs. The Office of the Attorney General's debit card program is credited with saving the agency $3.6 million per year. The OAG uses its program for payment to recipients of child support - some $957 million to approximately 300,000 clients.
Roughly 200,000 parents who receive child support enrolled in the OAG program during its first year. Attorney General Greg Abbott hailed the card as both an efficient and effective way to deliver child support payments and has called it a "dynamic cost-saving program." Because of the debit card program, he said, "Parents need not worry about lost or stolen checks or wonder if a deposit has cleared."
Likewise, The Texas Workforce Commission (TWC) uses the electronic payment cards for unemployment benefits for $2.2 billion in payments that go to 556,000 clients. TWC reports the move to electronic payment cards saves the agency $1.4 million per year.
Texas would not be the first state to move from paper checks to an EPC program. Multiple agencies in Oklahoma already send state payments to a single state debit card. Multiple counties in California use a central state contract for cards and card services as do multiple agencies in Florida.
The savings to Texas could be significant, according to the CCG's research, which notes that the more than 338,000 payroll checks that are issued annually to state employees could be moved to an EPC, as could 2.4 million electronic benefit transfers in the Temporary Assistance to Needy Families program. The 40,000 checks issued annually to inmates released from the Texas Department of Criminal Justice also could move to an EPC, as could the 82,000 warrants paid annually through the Department of Family and Protective Services for foster care and adoption subsidies.
Not only would the electronic payment cards be a benefit to the state, according to CCG research, but institutions of higher education, local governments and public schools could also benefit from this program they likely could not create by themselves. Paper warrants could be replaced for everything from pay checks to payment for jury service.
