NEW ORLEANS -- Uncle Sam is joining treasury and finance’s war on checks.
The U.S. Department of the Treasury is piloting mobile payments for non-recurring payments in an effort to reduce check usage, according to John Hill, AAP, Assistant Commissioner, Payment Management and Chief Disbursing Officer of the Treasury, Bureau of the Fiscal Service.
For nearly a year the Treasury Department has been testing mobile payments for one bureau within the Department of Justice, Hill said. Speaking at the Payments 2015 Conference, Hill said Treasury is currently using PayPal, though there are plans to expand to other services, including Apple Pay, Dwolla and SquareCash.
“If I can make a payment on a smartphone and get instant acknowledgement, that’s efficient,” Hill said. “If I have to travel—in some cases 20 or 30 miles—to a regional office to pick up a paper check and then drive back, and I’m getting paid to do all that, that totals up.”
The U.S. Treasury’s approach to mobile payments is a good example for corporate treasury departments, in that its ultimate goal is to integrate mobile into its traditional payment processes. “It is highly integrated into the accounting process in the agency and the account process in Treasury,” Hill said. “It has all the controls and all the discipline that we have in any other payment.”
Ultimately, Treasury would like to roll this out to all government agencies. Though Hill could not give a specific start date, he estimated that 2017-2018 is a good possibility.
Finding a solution
Hill said federal agencies issue about 7 million checks annually for small, one-time payments, typically for administrative purposes.
“For example, a musician might come to the Library of Congress for an afternoon concert. The Library of Congress will usually write a check on the spot, because that musician wants that instant acknowledgement that she is paid,” Hill said.
As corporate treasurers know, there are a multitude of hidden costs inherent in paper checks. “The average price per check is at least $2, but that doesn’t include the cost of somebody going to the disbursing center to get the check,” Hill told AFP. “Because very often, they’re not printing the check right there on the spot. There are all these ancillary costs with checks that people never include in the equation.”