[Federal Register Volume 84, Number 200 (Wednesday, October 16, 2019)]
[Proposed Rules]
[Pages 55267-55273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21825]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 208

[FISCAL-2018-0001]
RIN 1510-AB26


Management of Federal Agency Disbursements

AGENCY: Bureau of the Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking with request for comment.

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SUMMARY: The Department of the Treasury (Treasury), Bureau of the 
Fiscal Service (Fiscal Service or ``we''), is proposing to amend its 
regulation that requires electronic delivery of all Federal payments 
aside from tax payments. The proposed rule would eliminate obsolete 
references in the regulation, including references to the Electronic 
Transfer Account (ETA\SM\). In addition, the proposed rule would 
provide for the disbursement of non-benefit payments, including tax 
payments, through Treasury-sponsored accounts, such as the U.S. Debit 
Card. The proposed rule would 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: Comments on the proposed rule must be received by December 16, 
2019.

ADDRESSES: Comments on this rule, identified by docket Fiscal-2018-
0001, should be submitted using the following methods:
     Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions on the website for submitting comments.
     Mail: Department of the Treasury, Bureau of the Fiscal 
Service, Attn: Brett Smith, Director, EFT Strategy Division, 3201 
Pennsy Drive, Bldg/ E, Landover, MD 20785].
    Instructions: All submissions received must include the agency name 
(Bureau of the Fiscal Service) and docket number for this rulemaking. 
In general, comments received will be published on Regulations.gov 
without change, including any business or personal information 
provided. Comments received, including attachments and other supporting 
materials, are part of the public record and subject to public 
disclosure. Do not disclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    You can download this proposed rule at the following website: 
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], or 
Natalie H. Diana, Senior Counsel, at (202) 874-6680 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    In 1998, Fiscal Service published part 208 of title 31, Code of 
Federal Regulations (part 208), to implement the requirements of 
Section 3332, title 31 United States Code, as amended by

[[Page 55268]]

subsection 31001(x)(1) of the Debt Collection Improvement Act of 1996 
(Pub. L. 104-134) (Section 3332). Section 3332 generally requires that 
all Federal payments other than tax payments be made by electronic 
funds transfer (EFT), unless waived by the Secretary. The Secretary 
must ensure that individuals required to receive Federal payments by 
EFT have access to an account at a financial institution ``at 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).
    Fiscal Service has had great success in reducing check payments, 
but still must print and mail close to 60 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.

ETASM Accounts

    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.

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.

U.S. Debit Card

    Since 2008 Fiscal Service has also sponsored another prepaid card 
account, the U.S. Debit Card, for 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. Proposed Change to Regulation

Summary of Proposal

    We are proposing to update 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.
    After conducting an analysis of the ETA program in 2017, Fiscal 
Service concluded that it was time to end the program. As of September 
2018, all ETA accounts were closed. Accordingly, we are proposing to 
remove now-obsolete references to the ETA from the regulation.
    We are also proposing to eliminate 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 will 
remain unchanged.
    We are proposing to expand 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 would continue to be excluded 
from the electronic payment mandate that applies to other Federal 
payments, consistent with Section 3332. However, the definitional 
change would provide flexibility to offer taxpayers Treasury-sponsored 
accounts as an electronic payment alternative for the receipt of tax 
payments on a voluntary basis.
    Lastly, because payment methods continue to evolve we are proposing 
to revise part 208 to address the use of other ``Treasury-sponsored 
accounts'' for the delivery of Federal payments. The proposed revisions 
will 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. This will impact the U.S. Debit Card program. However, we 
are not proposing to change the regulatory treatment of Direct Express 
accounts or make any changes to the Direct Express program. The concept 
of Treasury-sponsored accounts and changes to the U.S. Debit Card 
program are discussed immediately below.

Treasury-Sponsored Accounts

    In order to support existing and emerging methods of paying 
individuals, Fiscal Service is proposing to add a new term, ``Treasury-
sponsored account,'' to the regulation. A Treasury-sponsored account 
would be 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'' 
would include, but not be 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 proposed 
rule would broaden 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-disbursed accounts would be required to be made 
available at a

[[Page 55269]]

reasonable cost and with the same consumer protections provided to 
other account holders at the financial institution, thereby meeting the 
requirements of Section 3332.

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.
    It is Fiscal Service's view that the U.S. Debit Card meets the 
statutory ``reasonable cost'' and ``same consumer protection'' 
requirements of Section 3332. 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 *\1\ (3 consecutive months of no activity)..  $1.50
Money NetworkTM Check (use, order, or stop payment; cash at  0.00
 participating check-cashing locations).
Signature Point-of-Sale Transactions (for purchases,         0.00
 declines and returns) [bond] U.S. and Non-U.S.
PIN Point-of-Sale Transactions--with or without Cash Back    0.00
 (for purchases and declines) [bond] U.S. and Non-U.S.
PIN Point-of-Sale Transactions--with or without Cash Back    0.00
 (for returns) [bond] U.S. and Non-U.S.
ATM Withdrawals [bond] U.S. In-Network ATMs including        0.00
 AllPoint Network ATMs (Unlimited).
ATM Withdrawals [bond] U.S. Out-of-Network ATMs (First Free  2.00
 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 any bank    7.00
 that displays the logo shown on your card).
Third-party wallet tokenization (load, transfer, or ACH) *.  0.01
Transfer Funds to a Bank Account via ACH transfer *........  0.00
Monthly Paper Statement by Mail *..........................  0.00
Periodic Monthly Paper Statement Expedited Mail *..........  N/A
Balance Inquiries and Alerts [bond] via Mobile App,          0.00
 Automated Phone System, Customer Service, Online Access,
 or Notifications (push, email or text) *.
Customer Service 24/7 *....................................  $0.00
* Disbursement or funds transfer via Direct to Debit.......  * 0.15 + Network Costs
Replacement Card with Standard Delivery....................  $7.50
Replacement Card with Expedited Delivery...................  24.50
----------------------------------------------------------------------------------------------------------------
* Network costs are the cost of debit network interchange and other network costs imposed directly by the
  network for a funds transfer. Transactions are routed using a least-cost routing approach to select the
  available network with the lowest total fee.

    U.S. Debit 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.
    Fiscal Service invites comment on how the U.S. Debit Card fees 
compare with fees for general purpose prepaid cards in the marketplace, 
as well as fees for traditional checking or savings accounts. We 
welcome commenters' views on whether the U.S. Debit Card fees, in the 
aggregate, are reasonable.

III. Section-by-Section Analysis

Sec.  208.1
    We are proposing to revise Sec.  208.1 by removing the statement 
that part 208 does not apply to tax payments. As revised, part 208 
would allow for the delivery of tax payments to Treasury-sponsored 
accounts, but would not mandate that tax payments be made by EFT.
Sec.  208.2
    Proposed Sec.  208.2(a)-(c) are unchanged.
    Proposed Sec.  208.2(d), which defines ``disbursement'' in the 
context of electronic benefit transfer, would be broadened into a 
definition of disbursement for not just benefit payments but also non-
benefit payments. The proposed rule would substitute the phrase 
``payments

[[Page 55270]]

electronically delivered to Treasury-sponsored accounts'' for the 
existing phrase ``electronic benefit transfer.''
    Proposed Sec.  208.2(e), which defines ``electronic benefits 
transfer'' (EBT), would substitute the phrase ``Treasury-sponsored 
account'' for the existing phrase ``a Direct Express card'' and remove 
the reference to the ETA. Thus, the definition of electronic benefits 
transfer would include 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.
    Proposed Sec.  208.2(f) is unchanged.
    Proposed Sec.  208.2(g) would set forth the definition of Federal 
payment, which is currently located at paragraph (h). Currently 
paragraph (g) sets forth the definition of ETA, which we are proposing 
to eliminate. The definition of Federal payment would be revised to 
include payments made under the Internal Revenue Code of 1986, which 
are currently excluded from the definition.
    Proposed Sec.  208.2(h)-(i) are unchanged except that the 
definitions have been re-lettered from current Sec.  208.2(i)-(j).
    Proposed Sec.  208.2(j), which defines Financial Agent, would 
revise the definition currently located at Sec.  208.2(k). Currently 
the definition of Financial Agent for purposes of part 208 is limited 
to a financial agent that provides electronic benefit transfer (EBT) 
services. As revised, the definition would include a financial 
institution that has been designated by Treasury as a Financial Agent 
for the provision of electronic funds transfer services as well.
    Proposed Sec.  208.2(k)-(o) are unchanged from the current 
regulation except that the definitions have been re-lettered.
    Proposed Sec.  208.2(p) would add 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.
    Proposed Sec.  208.2(q) would add a definition of U.S. Debit Card 
to part 208.
Sec.  208.3
    Sec.  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. Proposed Sec.  
208.3 would add a sentence stating that this requirement does not apply 
to payments under the Internal Revenue Code of 1986. The sentence is 
necessary because of the proposed change to the definition of Federal 
payment to include payments made under the Internal Revenue Code of 
1986.
Sec.  208.4
    Sec.  208.4 contains waivers from the requirement that a Federal 
payment be made electronically. We are proposing to eliminate 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 would be replaced by 
references to ``Treasury-sponsored accounts.''
    Sec.  208.4(a)(2)-(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 
proposing to eliminate the text of Sec.  208.5 in its entirety and 
replace 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, would include not only benefit payments but also 
miscellaneous, vendor, expense reimbursement and tax payments. Proposed 
Sec.  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. As 
proposed, Sec.  208.6 would be broadened to provide that an individual 
who receives a Federal payment shall be 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
    Proposed Sec.  208.7 is unchanged except that the reference to a 
Direct Express account would be replaced by a reference to a 
``Treasury-sponsored account.''
Sec.  208.8
    We are proposing to add a sentence to current Sec.  208.8 that 
would state 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. We request comment on this proposal.
Sec.  208.9-11
    We are not proposing any changes to Sec.  208.9, Sec.  208.10, or 
Sec.  208.11.

IV. Procedural Analysis

Request for Comment on Plain Language

    Executive Order 12866 requires each agency in the Executive branch 
to write regulations that are simple and easy to understand. We invite 
comment on how to make the proposed rule clearer. For example, you may 
wish to discuss: (1) Whether we have organized the material to suit 
your needs; (2) whether the requirements of the rule are clear; or (3) 
whether there is something else we could do to make this rule easier to 
understand.
Regulatory Planning and Review
    The proposed 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 Analysis
    It is hereby certified that the proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule provisions being amended apply to

[[Page 55271]]

individuals who receive Federal payments, and do not have any direct 
impact on small entities.
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 proposed 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.
Words of Issuance
    For the reasons set out in the preamble, we propose to revise 31 
CFR part 208 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);

[[Page 55272]]

    (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 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.  208.5 or Sec.  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.  208.3  Payment by electronic funds transfer.

    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. This requirement does not apply to payments under the 
Internal Revenue Code of 1986.


Sec.  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.  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.  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.  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.  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

[[Page 55273]]

which the recipient is receiving other Federal payments.


Sec.  208.9  Compliance.

    (a) Treasury will monitor agencies' compliance with this part. 
Treasury may require agencies to provide information 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.  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.  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.  208.4 
and 208.7 and Sec.  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. 2019-21825 Filed 10-15-19; 8:45 am]
 BILLING CODE 4810-AS-P