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Education

percent of program funds disbursed." That's 0.1% for a Such large numbers sometimes make it hard to appreciate
card compared to 2% or more to cash a check." the impact on individuals, so here's a specific example: For
a federal benefit payee receiving a monthly payment of
In 2022, approximately 3.4 million Americans received 53 $700, a 2 percent check cashing fee would be $14. Over the
million federal benefit payments, totaling $40 billion, on course of a year, that recipient would pay $168 in check-
Direct Express cards. The program has helped the Trea- cashing fees, just to access their own money. Today, with
sury Department meet the statutory mandate that all ben- many Americans struggling to make ends meet, saving an
efit payments be made by electronic funds transfer, saving extra $168 over the course of a year could make a real dif-
significant taxpayer dollars. Even more striking than the ference.
savings to the government, however, is how much Direct
Express saves benefit recipients compared to receiving As Barbara Ehrenreich said, it's expensive to be poor
paper checks: an estimated minimum of $140 million and (https://tinyurl.com/3md6kyzz). People shouldn't have to
probably closer to $500 million, given the check cashing struggle to access their money. Better options exist for
fees allowed in many states. Americans to access their money than check cashing ser-
vices. For the millions of unbanked federal benefit recipi-
(The low $140 million estimate is based on the lowest ents, the Direct Express prepaid card program is that bet-
widely available check cashing service ($4 per check), mul- ter option: it lets them keep more of their own money.
tiplied by the 53 million payments distributed on Direct
Express in 2022, multiplied by 66 percent (the percentage Andrew Gillen is vice president for account management and head
of cardholders who are unbanked). The high end of the of federal government programs for Mastercard. He has twenty years
estimate range is based on the 2 percent check cashing
fee allowed in nearly all states multiplied by the total dis- of experience in the payments industry and has also served in gov-
bursed via Direct Express ($40 billion) times the percent ernment at both federal and state levels. He holds a Master of Public
of unbanked cardholders (66 percent). The latter figure is Administration degree from the University of Pennsylvania and an MBA
still somewhat conservative because many states allow from the Kellogg School of Management at Northwestern University.
check cashing fees higher than 2 percent.) Contact Andrew via LinkedIn at www.linkedin.com/in/publicfinance/.

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