What's the Scoop on EFT 99?

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As financial institutions make preparations to get their employees and customers ready for EFT 99, the 1996 law that requires most federal payments to be disbursed electronically by January 1999, we have received many questions. To help you get up to speed on this important initiative, following is a summary of several key points.

When Is EFT 99 Effective?

The first part of the law went into effect July 1996, after which all newly eligible recipients of federal payments must receive their money electronically. By Jan. 1, 1999, most federal benefit recipients will receive their payments electronically, including those who were receiving payments before the mandate became effective in 1996.

Who Is Eligible for a Waiver?

Some federal recipients could be exempt from EFT 99. In September, the Treasury issued a proposed rule that details who is eligible for a waiver. Recipients with bank accounts who were receiving checks before July 26, 1996, and those who do not have accounts at financial institutions can request waivers if receiving electronic payments would impose hardships due to physical disabilities or geographic barriers.

What About Government Vendors?

Companies doing business with the government must receive their payments electronically. However, in certain circumstances agencies can pay vendors by check when making the payment electronically would be more expensive, such as one-time payments. Electronic payments will not be required in situations that are impractical or pose a threat to national security.

What if Recipients Do Not Have Bank Accounts?

Recipients with accounts at financial institutions must receive their payments by direct deposit. The Treasury's proposed rule recommends that recipients who do not have bank accounts open ones of their own, or they will be provided with Electronic Transfer Accounts (ETAs) in their names at financial institutions selected by the Treasury.

ETAs will enable recipients to withdraw funds through ATM machines and point-of-sale terminals using access cards. The Treasury has not yet determined the exact structure and date of when these accounts will be available.

ETA recipients also will be eligible for financial hardship waivers if they believe the fees associated with this account are too costly.

What's Next?

The Treasury currently is reviewing all comments on the proposed rule, which were due December 16, and will publish a final rule in early 1998. Once it is in place, the Treasury will implement an extensive public education campaign. For more detailed information on EFT 99, contact Cheryl McCarthy in St. Louis at (314) 444-8459. You also can visit the EFT 99 web site at www.fms.treas.gov/eft.