Innovative Use of Debit Cards Reduces Government Costs

Everyone, everywhere, including state and federal government agencies, is trying to save money and cut back on expenses these days. Fortunately, the mindset of saving combined with the advancement in technology is allowing costs to be cut and savings to be gained—all in some very innovative ways.

Nebraska Receives Recognition

The State of Nebraska recently received recognition in Washington D.C. for its efforts. The state was able to reduce the costs to taxpayers when it comes to child support payments issued by the state. This effort is leading the way to reducing costs for the taxpayers of the state. Nebraska Child Support Payment Center uses an innovative approach to issuing these child support payments. The agency issues the payments using prepaid debit cards. Its recognition in Washington D.C. is hailing the agency as a role model that is worth emulating.

Troy Reiners, director of the Nebraska Child Support Payment Center, said approximately 97% of child support payments are now done through direct deposit or prepaid debit cards. Without the cost for printing checks and the postage for mailing them, costs have gone from $385,000 in 2003 to $26,700 in 2010.

It’s Not the First Time

States like Georgia have been testing out the prepaid debit card program for state tax refunds. For now, it is a pilot program, but Nebraska is certainly not the first state to try these prepaid debit cards as a means to cut costs and ease the process of getting money into the hands of taxpayers and consumers. In addition to saving the government and taxpayers money, prepaid debit card programs also serve the millions of Americans around the country that do not have a bank account in which to deposit the check or cash the check without paying check cashing fees.

It’s on a Federal Level

In addition to the state programs, the federal government too has been giving the prepaid debit card program a whirl as a means to cut costs. In January 2011, the federal government announced that it would allow some taxpayers to opt to receive their federal tax refunds on a prepaid debit card instead of direct deposit or a paper check. This is expected to save the Internal Revenue Service $43.5 million for the 2010 tax season. It costs the federal government approximately $45 million to send out the 45 million paper refund checks that go out to taxpayers and reissuing checks that get lost in the mail, while the debit card program is only expected to cost $1.5 million.

Jennifer Brown

Jennifer Brown, an external business consultant working with a Fortune 500 company, has years of experience to her credit. Despite having a busy schedule through the day, she takes time out to write articles dealing with credit cards, payday loans and other financial aspects. She has completed her Bachelor degree in Financial Services from Columbia University and has been actively involved in various activities for the betterment of society.