Electronic payments are growing by leaps and bounds,overtaking paper as preferred payment mechanisms. Governments at all levels have embraced this change, often not just encouraging a move from paper checks but even requiring it. Electronic payments have advantages for all parties. Governments lower the cost of distributing benefits. The payments industry realizes further economies of scale and greater revenue from wider use of the payments network. For individuals, electronic payments lower the incidence of lost checks and potentially improve efficiency and convenience. Electronic payments 1.0 is a success story.

Electronic payments spare government the cost of writing and distributing checks while delivering funds to recipients more safely and reliably. But electronic payment methods can do more—and defining “more” will be the next chapter in the story.

By far, most recurring government electronic payments, such as Social Security and unemployment benefits, are made via direct deposit. However, direct deposit does not work for people without bank accounts. Payment cards—prepaid debit cards with a 16-digit number, magnetic strip, and network logo—are an electronic option that does not need a bank account. When state and federal governments require recipients to receive their benefits electronically, those who do not choose direct The same systems that made electronic payment possible can also help people understand and plan their financial lives.