President Barack Obama recently announced that the federal government would increase security for government issued debit cards, which are used to provide payments to some Social Security disability recipients, after several large retailers have faced data breaches related to customer information.
Many Social Security disability recipients receive their payments through the government issued debit cards because they do not have a bank account to enroll in direct deposit. It is estimated that more than 5 million beneficiaries receive their payments through the Direct Express program, which issues the government issued debit cards, according to The Wall Street Journal. The Social Security Administration has stopped sending out paper checks to beneficiaries in a cost-cutting move.
The government’s plan was first reported by The Hill, a WashingtonD.C. newspaper that reports on Congress. The new cards, which the government has already begun to issue to beneficiaries, contains a computer chip and the traditional magnetic strip on the back for enhanced security measures. It is believed that the internal chip contained in the new cards make them less vulnerable to fraud and stolen information.
According to The Wall Street Journal, chip cards have been used widely in Europe, Asia and Canada for years, but not so much until recently in the United States. Financial institutions in the United States are expected to issue more than 575 million new chip-enhanced cards to consumers by the end of next year, this will represent more than half of the 1 billion financial cards believed to be active.
The new cards will not only be issued to people receiving Social Security disability payments, but also to people who receive Social Security retirement payments and veteran’s benefits.
To learn more about the government’s plan to enhance the security of the new government-issued cards click here.
