Management of Federal Agency Disbursements, 25287-25293 [2020-08058]

Agencies

• Fiscal Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 85, Number 85 (Friday, May 1, 2020)]
[Rules and Regulations]
[Pages 25287-25293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08058]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 208

[Docket No.: FISCAL-2018-0001]
RIN 1510-AB26


Management of Federal Agency Disbursements

AGENCY: Bureau of the Fiscal Service, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury (Treasury), Bureau of the 
Fiscal Service (Fiscal Service or ``we''), is adopting the changes 
proposed in its Notice of Proposed Rulemaking for its regulation that 
requires electronic delivery of all Federal payments aside from tax 
payments. The final rule eliminates obsolete references in the 
regulation, including references to the Electronic Transfer Account 
(ETA\SM\). In addition, the final rule provides for the disbursement of 
non-benefit payments, including tax payments, through Treasury-
sponsored accounts, such as the U.S. Debit Card. The final rule does 
not mandate the electronic delivery of tax payments or affect the 
Direct Express[supreg] program, which will continue to be available to 
recipients of benefit payments.

DATES: Effective June 1, 2020.

ADDRESSES: You can download this final rule at the following internet 
address: https://fiscal.treasury.gov/fsservices/gov/pmt/eft/regulations.htm.

FOR FURTHER INFORMATION CONTACT: Brett Smith, Director, EFT Strategy 
Division, at (202) 874-6666 or [email protected]; Natalie 
H. Diana, Senior Counsel, at (202) 874-6680 or 
[email protected]; or Caitlin Gehring, Attorney 
Advisor, at (202) 874-5710 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    On October 16, 2019, we published a Notice of Proposed Rulemaking 
(NPRM) at 84 FR 55267, requesting comment on proposed amendments to 31 
CFR part 208 (part 208), which implements the requirements of 31 U.S.C. 
3332 (Section 3332). Section 3332 generally requires that all Federal 
nontax payments be made by electronic funds transfer (EFT), unless 
waived by the Secretary of the Treasury. The Secretary must ensure that 
individuals required to receive Federal payments by EFT have access to 
an account at a financial institution ``at

[[Page 25288]]

a reasonable cost'' and with ``the same consumer protections with 
respect to the account as other account holders at the same financial 
institution.'' See 31 U.S.C. 3332(f), (i)(2). Direct deposit is the 
primary method used to make EFT Federal payments. We are updating part 
208 to reflect the evolution of Fiscal Service's payment technologies 
and to eliminate obsolete ETA references and expired EFT waiver 
categories. The waiver categories that have not expired remain in place 
without change. We are adopting as final all of the amendments proposed 
in the NPRM.
    Fiscal Service has had great success in reducing check payments, 
but still must print and mail more than 50 million checks each year. 
More than half of these are for non-benefit payments, especially tax 
payments. Over the years, Fiscal Service has implemented multiple 
solutions to facilitate electronic payments.

A. ETA

    In conjunction with the 1998 publication of part 208, Fiscal 
Service developed the ETA, a low-cost account offered by participating 
financial institutions for those individuals who wish to receive their 
Federal payments by direct deposit. See Notice of Electronic Transfer 
Account Features, 64 FR 38510 (July 16, 1999). Fiscal Service 
determined to end the program in 2017 and as of September 2018 all ETA 
accounts were closed.

B. Direct Express[supreg] Card

    In 2008, Fiscal Service introduced the Direct Express[supreg] Debit 
MasterCard[supreg] card. The Direct Express card is a low-cost prepaid 
debit card account developed for Federal benefit recipients (initially, 
for Social Security and Supplemental Security Income payment 
recipients). In 2010, Fiscal Service amended part 208 to establish the 
Direct Express card as an account that meets the requirements of 
Section 3332(i), which ensures that payment recipients have access to 
an account at a reasonable cost and with the same consumer protections 
as other account holders at the financial institution that issues the 
card.

C. U.S. Debit Card

    Since 2008, Fiscal Service has also sponsored another prepaid card 
account, the U.S. Debit Card, to support our efforts to reduce the 
number of non-benefit payments made by cash or check. The U.S. Debit 
Card program enables agencies to make Federal non-benefit payments to 
recipients through prepaid debit cards instead of through checks or 
cash. The accounts are issued, and the program is operated, by a 
financial institution designated as Fiscal Service's financial agent. 
Federal entities and programs use the U.S. Debit Card to make payments 
for a variety of purposes, including stipends, awards, grants, and 
travel reimbursements for local visitors and international guests.
    In recent years, Fiscal Service has engaged in testing and 
developing payment methods to facilitate the electronic delivery of 
Federal non-benefit payments, in order to reduce check payments and 
provide more options for payment recipients. In particular, Fiscal 
Service is testing the delivery of payments to virtual accounts (which 
are accessed online or through a mobile device rather than a plastic 
card), as well as implementing capabilities to enable payment 
recipients to receive payments in real-time by providing a debit card 
number. The U.S. Debit Card program now includes this functionality.

II. Public Comment and Fiscal Service Response

    Fiscal Service sought public comment on the proposed rule for 60 
days to assist the agency in giving full consideration to the matters 
discussed in the proposed rule. We received comments from one company, 
Visa, Inc. Visa supported the proposed changes and suggested one 
clarification. We appreciate Visa's support of the changes and Fiscal 
Service's efforts to embrace innovative payment technologies.
    Visa recommended clarifying the definition of ``electronic funds 
transfer'' to include disbursements to Treasury-sponsored accounts made 
through any electronic payment method, including but not limited to 
debit and credit networks, push payments, and mobile payments. 
Currently, Part 208 defines ``electronic funds transfer'' as a transfer 
``that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape,'' and gives examples of ``Automated 
Clearing House transfers, Fedwire transfers, and transfers made at 
automated teller machines and point-of-sale terminals.'' As Visa noted 
in its comment, the definition of ``electronic funds transfer'' is 
taken from the statute that Part 208 implements. See 31 U.S.C. 
3332(j)(1). (Note that the definition is also substantially the same 
definition used in the Electronic Fund Transfer Act. See 12 U.S.C. 
1693a(7).)
    We believe that departing from the statutory definition in the rule 
could cause confusion by implying that the regulation covers transfers 
that the statute does not. Accordingly, we are not revising the 
definition of ``electronic funds transfer'' in the final rule. However, 
disbursements to Treasury-sponsored accounts may be made using any kind 
of electronic funds transfer, including mobile payments, push payments 
and payment over debit and credit card networks, whether these payment 
methods are expressly referenced in the wording of the definition or 
not.

III. Summary of Final Rule

    In the Final Rule we are adopting all of the amendments to part 208 
that were proposed in the NPRM, as follows:
    We are removing now-obsolete references to the ETA from the 
regulation. The ETA program ended in September 2018.
    We are eliminating waiver provisions that have expired due to the 
passage of time. When part 208 was promulgated in 2010, it included a 
provision stating that individuals receiving Federal payments by check 
on March 1, 2011, could continue to do so through February 28, 2013. In 
addition, the rule provides that individuals who file claims for 
Federal benefits before March 1, 2011, and who request check payments 
when they file, may receive payments by check through February 28, 
2013. Since the February 28, 2013 deadline has expired, these 
provisions no longer have any effect and there is no purpose in 
retaining them in the rule. All other waiver provisions remain 
unchanged.
    We are amending the definition of ``Federal payment'' for purposes 
of part 208 to include payments made under the Internal Revenue Code of 
1986, to support the delivery of tax payments via Treasury-sponsored 
accounts. Tax payments continue to be excluded from the electronic 
payment mandate that applies to other Federal payments, consistent with 
Section 3332. However, the definitional change provides flexibility to 
offer taxpayers Treasury-sponsored accounts as an electronic payment 
alternative for the receipt of tax payments on a voluntary basis.
    Lastly, we are revising part 208 to provide for the use of other 
``Treasury-sponsored accounts'' for the delivery of Federal payments. 
The revisions provide flexibility to implement new methods of making 
payments, with the ultimate goal of reducing check payments, 
modernizing Fiscal Service's payment capabilities, and offering payment 
recipients electronic alternatives to checks or direct deposit to a 
traditional bank account. We are not changing the regulatory treatment 
of Direct Express accounts or making any changes to the Direct Express 
program. The concept of Treasury-sponsored accounts and the features of 
the U.S.

[[Page 25289]]

Debit Card program are discussed immediately below.

A. Treasury-Sponsored Accounts

    In order to support existing and emerging methods of paying 
individuals, Fiscal Service is adding a new term, ``Treasury-sponsored 
account,'' to the regulation. A Treasury-sponsored account is defined 
as an account that a Treasury-designated financial agent establishes 
and administers for an individual for the disbursement of Federal 
payments, upon terms and conditions that Treasury considers 
appropriate. The term ``Treasury-sponsored account'' includes, but is 
not limited to, Direct Express and U.S. Debit Cards. Although Fiscal 
Service does not have current plans to develop Treasury-sponsored 
accounts other than Direct Express and U.S. Debit Cards, this 
terminology provides flexibility for the future.
    Currently the regulation only addresses the use of accounts 
established by financial agents to accomplish disbursement of benefit 
payments and accounts established for disaster victims. The final rule 
broadens the uses of accounts established by financial agents for 
disbursement purposes, including to disburse not just benefit payments 
but also miscellaneous, vendor, expense reimbursement and tax payments. 
Treasury-sponsored accounts are required to be made available at a 
reasonable cost and with the same consumer protections provided to 
other account holders at the financial institution, thereby meeting the 
requirements of Section 3332.

B. U.S. Debit Card

    Historically, Fiscal Service structured the U.S. Debit Card program 
as a conventional general purpose prepaid card program, which provides 
payment recipients with access to their funds via a plastic card. 
Recently, Fiscal Service expanded the U.S. Debit Card program to 
include a new virtual account option, which allows payment recipients 
to establish a prepaid account accessible through their mobile devices 
or online without the use of a plastic card. Payment recipients who 
open a virtual U.S. Debit Card account have the capability to move 
their funds in real-time through Direct to Debit functionality, which 
allows the cardholder to transfer funds on the basis of a debit card 
number. They may also opt to have a plastic U.S. Debit Card to access 
funds in the account if they so choose.
    In the NPRM, Fiscal Service described the features and fees of the 
U.S. Debit Card and requested comment on our view that the U.S. Debit 
Card meets the statutory ``reasonable cost'' and ``same consumer 
protection'' requirements of Section 3332. One comment was received in 
support of that view. No comments were received in opposition of that 
view.
    As discussed in the NPRM, a 2014 study by the Federal Reserve Bank 
of Kansas City found that prepaid cardholders pay, on average, $11 per 
month in fees. Some of the fees included in that amount are monthly, 
account maintenance, IVR and ATM balance inquiry, ATM withdrawal, PIN 
and signature transaction, and declined transaction fees. See General 
Purpose Reloadable Cards: Penetration, Use, Fees and Fraud Risks, The 
Federal Reserve Bank of Kansas City, RWP 14-01, February 2017. In 
contrast, the U.S. Debit Card carries no monthly fee and can be used at 
no cost in many cases. There are no fees for cardholders to sign up for 
or activate the card; receive deposits; make purchases at retail 
locations, online or by telephone; or get cash at retail locations and 
financial institutions. Cardholders can check their balances and sign 
up for alerts via the mobile app, text, telephone or email. If desired, 
a cardholder may receive a monthly paper statement. There are no fees 
for declined transactions. Cardholders may close their card account at 
any time without a fee.
    Cardholders may make purchases anywhere VISA[supreg] is accepted, 
including millions of retail locations worldwide, online, or by 
telephone. Similarly, cardholders may make unlimited free cash 
withdrawals and check their account balances at Allpoint ATMs as well 
as one free out-of-network ATM cash withdrawal for every Federal 
payment the cardholder receives. There are also other means by which 
cardholders may access their funds for free. Cardholders can transfer 
funds for free to a bank account and have free use of Money Network\TM\ 
checks to access their funds. The free services and minimal fees are 
fully disclosed in materials that are provided to new U.S. Debit Card 
account holders, as shown in the following chart:

                              Fee Schedule
------------------------------------------------------------------------
                Transaction type                           Fees
------------------------------------------------------------------------
Inactivity Fee[thinsp]*\1\ (3 consecutive months  $1.50.
 of no activity).
Money Network\TM\ Check (use, order, or stop      0.00.
 payment; cash at participating check-cashing
 locations).
Signature Point-of-Sale Transactions (for         0.00.
 purchases, declines and returns) [bond] U.S.
 and Non-U.S.
PIN Point-of-Sale Transactions--with or without   0.00.
 Cash Back (for purchases and declines) [bond]
 U.S. and Non-U.S.
PIN Point-of-Sale Transactions--with or without   0.00.
 Cash Back (for returns) [bond] U.S. and Non-U.S.
ATM Withdrawals [bond] U.S. In-Network ATMs       0.00.
 including AllPoint Network ATMs (Unlimited).
ATM Withdrawals [bond] U.S. Out-of-Network ATMs   2.00.
 (First Free per deposit).
ATM Withdrawals [bond] Non-U.S. ATMs............  3.00.
ATM Inquiries [bond] U.S. and Non-U.S...........  0.25.
Declined Point-of-Sale (POS) Transaction........  0.00.
Bank Teller Over-the-Counter Cash Withdrawal (at  7.00.
 any bank that displays the logo shown on your
 card).
Third-party wallet tokenization (load, transfer,  0.01.
 or ACH)[thinsp]*.
Transfer Funds to a Bank Account via ACH          0.00.
 transfer[thinsp]*.
Monthly Paper Statement by Mail[thinsp]*........  0.00.
Periodic Monthly Paper Statement Expedited        N/A.
 Mail[thinsp]*.
Balance Inquiries and Alerts [bond] via Mobile    0.00.
 App, Automated Phone System, Customer Service,
 Online Access, or Notifications (push, email or
 text)[thinsp]*.
Customer Service 24/7[thinsp]*..................  $0.00.
*[thinsp]Disbursement or funds transfer via       *[thinsp]0.15 +
 Direct to Debit.                                  Network Costs.
Replacement Card with Standard Delivery.........  $7.50.
Replacement Card with Expedited Delivery........  24.50.
------------------------------------------------------------------------


[[Page 25290]]

    U.S. Debit Card cardholders are protected by Regulation E (12 CFR 
part 1005), which generally provides certain protections to a 
cardholder whose card is lost or stolen, as well as VISA's Zero 
Liability protection. Card balances are covered by deposit insurance by 
the Federal Deposit Insurance Corporation (FDIC) to the extent allowed 
by law.

IV. Section-by-Section Analysis

Sec.  208.1

    We are amending Sec.  [thinsp]208.1 by removing the statement that 
part 208 does not apply to tax payments. In the final rule, part 208 
allows for the delivery of tax payments to Treasury-sponsored accounts, 
but does not mandate that tax payments be made by EFT.

Sec.  208.2

    The definition of ``disbursement'' in the context of electronic 
benefit transfer, is broadened into a definition of disbursement for 
not just benefit payments but also non-benefit payments. The final rule 
substitutes the phrase ``payments electronically delivered to Treasury-
sponsored accounts'' for the existing phrase ``electronic benefit 
transfer.''
    The definition of ``electronic benefits transfer'' (EBT), 
substitutes the phrase ``Treasury-sponsored account'' for the existing 
phrase ``a Direct Express card'' and removes the reference to the ETA. 
Thus, the definition of electronic benefits transfer includes Direct 
Express but not be limited to Direct Express. A reference to Public Law 
104-208 has been added to make it clear that the definition of 
``electronic benefits transfer'' applies to the various references in 
the public law to electronic benefits transfer.
    We are eliminating the definition of ETA.
    We are amending the definition of Federal payment to include 
payments made under the Internal Revenue Code of 1986, which are 
currently excluded from the definition.
    The definition of Financial Agent is revised to include a financial 
institution that has been designated by Treasury as a Financial Agent 
for the provision of electronic funds transfer services as well. 
Currently, the definition of Financial Agent for purposes of part 208 
is limited to a financial agent that provides electronic benefit 
transfer (EBT) services.
    We added a new term, ``Treasury-sponsored account,'' defined as a 
Direct Express card account, a U.S. Debit Card account, or another 
account established pursuant to Sec.  208.5 or Sec.  208.11.
    We added a definition of U.S. Debit Card to part 208.

Sec.  208.3

    Section 208.3 currently states that, subject to Sec.  208.4, and 
notwithstanding any other provision of law, all Federal payments made 
by an agency shall be made by electronic funds transfer. 
Section[thinsp]208.3 added a sentence stating that this requirement 
does not apply to payments under the Internal Revenue Code of 1986. The 
sentence is necessary because the change to the definition of Federal 
payment includes payments made under the Internal Revenue Code of 1986.

Sec.  208.4

    Section[thinsp]208.4 contains waivers from the requirement that a 
Federal payment be made electronically. We are eliminating the text of 
current paragraphs (a)(1)(i) and (ii). Those provisions provide, 
respectively, (i) that payment recipients who were receiving their 
payments from an agency by check before March 1, 2011, may to continue 
to receive those payments by check through February 28, 2013 and (ii) 
that individuals who filed claims for Federal payments before March 1, 
2011, and who requested check payments when they filed, are permitted 
to receive payments by check through February 28, 2013. Because those 
time periods have expired, the waivers are no longer needed in the 
regulation. The remaining paragraphs of Sec.  208.4(a)(1) are unchanged 
except that references to Direct Express accounts are replaced by 
references to ``Treasury-sponsored accounts.''
    Section[thinsp]208.4(a)(2) through (7) are unchanged. Section 
208.4(b) is unchanged except to reflect the renumbering of Sec.  
208.4(a)(1) resulting from the deletion of the obsolete waivers.

Sec.  208.5

    Current Sec.  208.5 addresses the provision of ETA accounts. We are 
eliminating the text of Sec.  208.5 in its entirety and replacing it 
with a provision stating that Treasury may designate a Financial Agent 
to establish and administer accounts for individuals for the 
disbursement of Federal payments. Federal payments, as defined in Sec.  
208.2, include not only benefit payments but also miscellaneous, 
vendor, expense reimbursement and tax payments. Section[thinsp]208.5 
provides that such accounts may be established upon terms and 
conditions that the Secretary considers appropriate or necessary and 
that they shall be made available at a reasonable cost and with the 
same consumer protections provided to other account holders at the 
financial institution. These requirements reflect that Treasury may 
deliver payments to such accounts and the maintenance of accounts and 
the provision of account-related services under this section shall 
constitute reasonable duties of a Financial Agent of the United States.

Sec.  208.6

    Currently Sec.  208.6 provides that an individual who receives a 
benefit payment is eligible to open a Direct Express account, under 
terms and conditions established by Treasury. This section also 
provides that the offering of a Direct Express account constitutes the 
provision of EBT services within the meaning of Public Law 104-208. In 
the final rule, Sec.  208.6 is broadened to provide that an individual 
who receives a Federal payment is eligible to open a Treasury-sponsored 
account, under terms and conditions established by Treasury. The 
sentence referring to Public Law 104-208 has been deleted as 
unnecessary in light of revisions to the definition of ``electronic 
benefit transfer.''

Sec.  208.7

    Section 208.7 is unchanged except that the reference to a Direct 
Express account is replaced by a reference to a ``Treasury-sponsored 
account.''

Sec.  208.8

    We are adding a sentence to current Sec.  208.8 that states that 
for recipients who do not designate a bank account for the receipt of 
payments, Treasury may disburse payments to a Treasury-sponsored 
account or to an account to which the recipient is receiving other 
Federal payments.

Sec.  208.9-11

    We are not changing Sec.  208.9, Sec.  208.10, or Sec.  208.11.

V. Procedural Analysis

Regulatory Planning and Review

    The final rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, the 
regulatory review procedures contained therein do not apply.

Regulatory Flexibility Act

    It is hereby certified that the final rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule provisions being amended apply to individuals who receive 
Federal payments, and do not have any direct impact on small entities.

[[Page 25291]]

Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532 (Unfunded Mandates Act), requires that the agency prepare a 
budgetary impact statement before promulgating any rule likely to 
result in a Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. If a budgetary 
impact statement is required, section 205 of the Unfunded Mandates Act 
also requires the agency to identify and consider a reasonable number 
of regulatory alternatives before promulgating the rule. We have 
determined that the final rule will not result in expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. Accordingly, 
we have not prepared a budgetary impact statement or specifically 
addressed any regulatory alternatives.

List of Subjects in 31 CFR Part 208

    Banks, banking, Debit card, Disbursement, Electronic funds 
transfer, Federal payment, Treasury-sponsored account.

0
 For the reasons set out in the preamble, 31 CFR part 208 is revised to 
read as follows:

PART 208--MANAGEMENT OF FEDERAL AGENCY DISBURSEMENTS

Sec.
208.1 Scope and application.
208.2 Definitions.
208.3 Payment by electronic funds transfer.
208.4 Waivers.
208.5 Accounts for disbursement of Federal payments.
208.6 Availability of Treasury-sponsored accounts.
208.7 Agency responsibilities.
208.8 Recipient responsibilities.
208.9 Compliance.
208.10 Reservation of rights.
208.11 Accounts for disaster victims.

    Authority: 5 U.S.C. 301; 12 U.S.C. 90, 265, 266, 1767, 1789a; 31 
U.S.C. 321, 3122, 3301, 3302, 3303, 3321, 3325, 3327, 3328, 3332, 
3335, 3336, 6503.


Sec.  208.1  Scope and application.

    This part applies to all Federal payments made by an agency. Except 
as specified in Sec.  208.4, this part requires payments, other than 
payments made under the Internal Revenue Code of 1986, to be made by 
electronic funds transfer.


Sec.  208.2  Definitions.

    The following definitions apply to this part:
    Agency means any department, agency, or instrumentality of the 
United States Government, or a corporation owned or controlled by the 
Government of the United States.
    Authorized payment agent means any individual or entity that is 
appointed or otherwise selected as a representative payee or fiduciary, 
under regulations of the Social Security Administration, the Department 
of Veterans Affairs, the Railroad Retirement Board, or other agency 
making Federal payments, to act on behalf of an individual entitled to 
a Federal payment.
    Direct Express[supreg] card means the prepaid debit card issued to 
recipients of Federal benefits by a Financial Agent pursuant to 
requirements established by Treasury.
    Disbursement means, in the context of payments delivered to 
Treasury-sponsored accounts, the performance of the following duties by 
a Financial Agent acting as agent of the United States:
    (1) The establishment of an account for the recipient that meets 
the requirements of the Federal Deposit Insurance Corporation or the 
National Credit Union Administration Board for deposit or share 
insurance;
    (2) The maintenance of such an account;
    (3) The receipt of Federal payments through the Automated Clearing 
House system or other electronic means and crediting of Federal 
payments to the account; and
    (4) The provision of recipient access to funds in the account on 
the terms specified by Treasury.
    Electronic benefits transfer (EBT) means the provision of Federal 
benefit, wage, salary, and retirement payments electronically, through 
disbursement by a financial institution acting as a Financial Agent. 
For purposes of this part and Public Law 104-208, EBT includes, but is 
not limited to, disbursement through a Treasury-sponsored account or a 
Federal/State EBT program.
    Electronic funds transfer means any transfer of funds, other than a 
transaction originated by cash, check, or similar paper instrument that 
is initiated through an electronic terminal, telephone, computer, or 
magnetic tape, for the purpose of ordering, instructing, or authorizing 
a financial institution to debit or credit an account. The term 
includes, but is not limited to, Automated Clearing House transfers, 
Fedwire transfers, and transfers made at automated teller machines and 
point-of-sale terminals. For purposes of this part only, the term 
electronic funds transfer includes a credit card transaction.
    Federal payment means any payment made by an agency. The term 
includes, but is not limited to:
    (1) Federal wage, salary, and retirement payments;
    (2) Vendor and expense reimbursement payments;
    (3) Benefit payments;
    (4) Miscellaneous payments including, but not limited to: 
Interagency payments; grants; loans; fees; principal, interest, and 
other payments related to U.S. marketable and nonmarketable securities; 
overpayment reimbursements; and payments under Federal insurance or 
guarantee programs for loans; and
    (5) Payments under the Internal Revenue Code of 1986 (26 U.S.C.).
    Federal/State EBT program means any program that provides access to 
Federal benefit, wage, salary, and retirement payments and to State-
administered benefits through a single delivery system and in which 
Treasury designates a Financial Agent to disburse the Federal payments.
    Federally-insured financial institution means any financial 
institution, the deposits of which are insured by the Federal Deposit 
Insurance Corporation under 12 U.S.C. Chapter 16 or, in the case of a 
credit union, the member accounts of which are insured by the National 
Credit Union Share Insurance Fund under 12 U.S.C. Chapter 14, 
Subchapter II.
    Financial Agent means a financial institution that has been 
designated by Treasury as a Financial Agent for the provision of 
electronic funds transfer or EBT services under any provision of 
Federal law, including 12 U.S.C. 90, 265, 266, 1767, and 1789a, and 31 
U.S.C. 3122 and 3303, as amended by the Omnibus Consolidated 
Appropriations Act, 1997, Section 664, Public Law 104-208.
    Financial institution means:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank

[[Page 25292]]

under section 5 of such Act (12 U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (6) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    Individual means a natural person.
    Recipient means an individual, corporation, or other public or 
private entity that is authorized to receive a Federal payment from an 
agency.
    Secretary means Secretary of the Treasury.
    Treasury means the United States Department of the Treasury.
    Treasury-sponsored account means a Direct Express card account, a 
U.S. Debit Card account, or another account established pursuant to 
Sec.  [thinsp]208.5 or Sec.  [thinsp]208.11.
    U.S. Debit Card means the prepaid debit card issued to recipients 
of certain Federal payments by a Financial Agent pursuant to 
requirements established by Treasury.


Sec.  [thinsp]208.3  Payment by electronic funds transfer.

    Subject to Sec.  [thinsp]208.4, and notwithstanding any other 
provision of law, all Federal payments made by an agency shall be made 
by electronic funds transfer. This requirement does not apply to 
payments under the Internal Revenue Code of 1986.


Sec.  [thinsp]208.4  Waivers.

    (a) Payment by electronic funds transfer is not required in the 
following cases:
    (1) Where an individual:
    (i) Was born prior to May 1, 1921, and was receiving payment by 
check on March 1, 2013;
    (ii) Receives a type of payment for which Treasury does not offer 
delivery to a Treasury-sponsored account. In such cases, those payments 
are not required to be made by electronic funds transfer, unless and 
until such payments become eligible for deposit to a Treasury-sponsored 
account;
    (iii) Is ineligible for a Treasury-sponsored account because of 
suspension or cancellation of the individual's Treasury-sponsored 
account by the Financial Agent;
    (iv) Has filed a waiver request with Treasury certifying that 
payment by electronic funds transfer would impose a hardship because of 
the individual's inability to manage an account at a financial 
institution or a Treasury-sponsored account due to a mental impairment, 
and Treasury has not rejected the request; or
    (v) Has filed a waiver request with Treasury certifying that 
payment by electronic funds transfer would impose a hardship because of 
the individual's inability to manage an account at a financial 
institution or a Treasury-sponsored account due to the individual 
living in a remote geographic location lacking the infrastructure to 
support electronic financial transactions, and Treasury has not 
rejected the request;
    (2) Where the political, financial, or communications 
infrastructure in a foreign country does not support payment by 
electronic funds transfer;
    (3) Where the payment is to a recipient within an area designated 
by the President or an authorized agency administrator as a disaster 
area. This waiver is limited to payments made within 120 days after the 
disaster is declared;
    (4) Where either:
    (i) A military operation is designated by the Secretary of Defense 
in which uniformed services undertake military actions against an 
enemy; or
    (ii) A call or order to, or retention on, active duty of members of 
the uniformed services is made during a war or national emergency 
declared by the President or Congress;
    (5) Where a threat may be posed to national security, the life or 
physical safety of any individual may be endangered, or a law 
enforcement action may be compromised;
    (6) Where the agency does not expect to make payments to the same 
recipient within a one-year period on a regular, recurring basis and 
remittance data explaining the purpose of the payment is not readily 
available from the recipient's financial institution receiving the 
payment by electronic funds transfer; and
    (7) Where an agency's need for goods and services is of such 
unusual and compelling urgency that the Government would be seriously 
injured unless payment is made by a method other than electronic funds 
transfer; or, where there is only one source for goods or services and 
the Government would be seriously injured unless payment is made by a 
method other than electronic funds transfer.
    (b) An individual who requests a waiver under paragraphs (a)(1)(iv) 
and (v) of this section shall provide, in writing, to Treasury a 
certification supporting that request, in such form that Treasury may 
prescribe. The individual shall attest to the certification before a 
notary public, or otherwise file the certification in such form that 
Treasury may prescribe.


Sec.  [thinsp]208.5  Accounts for disbursement of Federal payments.

    Treasury may designate a Financial Agent to establish and 
administer Treasury-sponsored accounts for individuals for the 
disbursement of Federal payments, including benefit, retirement, 
salary, miscellaneous, vendor, expense reimbursement and tax payments. 
Such accounts may be established upon terms and conditions that the 
Secretary considers appropriate or necessary and shall be made 
available at a reasonable cost and with the same consumer protections 
provided to other account holders at the financial institution. 
Treasury may deliver payments to such accounts and the maintenance of 
accounts and the provision of account-related services under this 
section shall constitute reasonable duties of a Financial Agent of the 
United States.


Sec.  [thinsp]208.6  Availability of Treasury-sponsored accounts.

    An individual who receives a Federal payment shall be eligible to 
open a Treasury-sponsored account under terms and conditions 
established by Treasury.


Sec.  [thinsp]208.7  Agency responsibilities.

    An agency shall put into place procedures that allow recipients to 
provide the information necessary for the delivery of payments to the 
recipient by electronic funds transfer to an account at the recipient's 
financial institution or to a Treasury-sponsored account.


Sec.  [thinsp]208.8  Recipient responsibilities.

    Each recipient who is required to receive payment by electronic 
funds transfer shall provide the information necessary to effect 
payment by electronic funds transfer. For recipients who do not 
designate a bank account for the receipt of payments, Treasury may 
disburse payments to a Treasury-sponsored account or to an account to 
which the recipient is receiving other Federal payments.


Sec.  [thinsp]208.9  Compliance.

    (a) Treasury will monitor agencies' compliance with this part. 
Treasury may require agencies to provide information

[[Page 25293]]

about their progress in converting payments to electronic funds 
transfer.
    (b) If an agency fails to make payment by electronic funds 
transfer, as prescribed under this part, Treasury may assess a charge 
to the agency pursuant to 31 U.S.C. 3335.


Sec.  [thinsp]208.10  Reservation of rights.

    The Secretary reserves the right, in the Secretary's discretion, to 
waive any provision(s) of this part in any case or class of cases.


Sec.  [thinsp]208.11  Accounts for disaster victims.

    Treasury may establish and administer accounts at any financial 
institution designated as a Financial Agent for disaster victims in 
order to allow for the delivery by electronic funds transfer of one or 
more Federal payments. Such accounts may be established upon terms and 
conditions that the Secretary considers appropriate or necessary in 
light of the circumstances. Treasury may deliver payments to these 
accounts notwithstanding any other payment instructions from the 
recipient and without regard to the requirements of Sec. Sec.  
[thinsp]208.4 and 208.7 and Sec.  [thinsp]210.5 of this chapter. For 
purposes of this section, ``disaster victim'' means an individual or 
entity located within an emergency area, or an individual or entity 
that has relocated or been displaced from an emergency area as a result 
of a major disaster or emergency. ``Emergency area'' means a 
geographical area in which there exists an emergency or disaster 
declared by the President pursuant to the National Emergencies Act (50 
U.S.C. 1601 et seq.) or the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5121 et seq.). The maintenance of 
accounts and the provision of account-related services under this 
section shall constitute reasonable duties of a Financial Agent of the 
United States.

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2020-08058 Filed 4-30-20; 8:45 am]
 BILLING CODE P