DENVER -- In cooperation with U.S. Bank (NYSE:USB), Colorado has become the first state to disperse child support payments on a plastic card versus a paper check.
According to a U.S. Bank news release, the Family Support Registry or FSR Card functions like a debit card though it is not attached to a checking or savings account. The state collects court ordered payments as it has in the past, but electronically loads the payment on to the card rather than cutting a check and mailing it to the recipient.
Recipients can use the Visa-branded card to withdraw cash at ATMs -- for a $1.50 fee -- or make point-of-sale purchases at retail locations where Visa is accepted.
"For many years we've been searching for a safe, reliable, and inexpensive way to deliver child support payments electronically to parents who don't have bank accounts. It appears we've found it in this card, and it is only a matter of time before many other government agencies pick up on it to deliver their payments," said Craig Goellner, systems director for the State of Colorado, in the release.
More than 1,200 child support recipients have used the card since a pilot began in 2001. The state is now making it available to all parents who receive child support checks. (There are 100,000 child support recipients currently in the state; 35,000 receive their payments via direct deposit.)
"Parents have told us they love the card. Our experience during the pilot bears this out in that we have had very few cancellations. It looks to us like a win-win for all," Goellner said.
U.S. Bank implemented a similar pilot in the State of Washington and is working with other government agencies to initiate stored value payment cards in more states and in various capacities, according to the release.
