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Debit Cards: A New Way to Pay

With the demise of imprest funds, agencies are wondering how they can get cash award payments to their employees quickly. The Department of Treasury is requiring all agencies to eliminate imprest funds by October 1, 2001. What about debit cards? Now they are used for more than retrieving money from automated teller machines (ATM). Agencies are using debit cards to deliver cash awards to recognize employee contributions.

• What is the U.S. Debit Card?
• What is the relationship of debit cards to awards programs?
• What is Treasury's goal for the U.S. Debit Card?
• Who sponsors the U.S. Debit Card?
• Who is using the debit card as part of their recognition program?
• Where can I get information about starting a U.S. Debit Card Program?

 

What is the U.S. Debit Card?   The U.S. Debit Card is a magnetic stripe card that uses the Internet as its infrastructure to deliver miscellaneous or non-recurring payments to individuals, or to allow Government employees access to cash in their official duties. Agencies can decide if the card can be used at ATMs, at point of sale (i.e., employees may use the card to purchase items from stores), or as a phone card.

What is the relationship of debit cards to awards programs?   Agencies can use debit cards to deliver a form of cash award, which we consider a cash surrogate. A cash surrogate is an item that may be immediately and easily redeemed for cash. Therefore, the recipient has the freedom and control of how, where, and when to use it.

What is Treasury's goal for the U.S. Debit Card?   The goal of the debit card project is to replace costly paper-based payment methods such as imprest funds, checks, third party drafts, and bulk cash. Agencies may issue the card as a disposable payment mechanism, with a fixed amount of value loaded to the card, and, once this value is spent, the employee discards the card. The debit card provides faster, more efficient, more secure, and lower cost funds distribution than checks, drafts, or imprest funds.

Who sponsors the U.S. Debit Card?   Lynk Systems is a national provider of electronic payment, cash dispensing, and e-commerce services. Lynk Systems processes transactions initiated by credit and debit cards, checks and electronic benefits transfer (EBT) cards from merchant point-of-sale terminals, as well as processing transactions via the Internet.

Who is using the debit card as part of their recognition program?   The Office of the Comptroller of the Currency (OCC) has been using the debit card for 2 years and the U.S. Mint just implemented its program in January 2001.

The OCC is using the debit card as the payment mechanism for its on-the-spot awards program. The program itself has not changed except that instead of receiving vouchers or electronic funds transfers, employees receive debit cards. Employees have a choice of using the card for ATM withdrawals or for point of sale transactions. The award amounts range from $40 to $500. In addition to the amount of the award, OCC covers ATM fees. Once OCC approves the award, the employee receives the debit card along with a personal identification number. From an award's initiation to its delivery, the process can take from 5 to 8 days. OCC has conducted a survey and found that a large proportion of the respondents are satisfied with the program. Contact Joanna Mullins at 202-874-4787 for more information.

The U.S. Mint is also using the debit card as a mechanism to pay awards for its on-the-spot awards program. Mint officials were looking for alternatives to the imprest fund. The use of the card became effective January 2001. Contact Sandra Williams at 202-354-7878 for more information.

Where can I get information about starting a U.S. Debit Card Program?   General information on the U.S Debit Card.

Origianlly published on Spring 2001