Partners (Winter 1999)

Electronic Transfer Accounts Benefit Both
Financial Institutions and Consumers

The U.S. Treasury has created a new electronic payments program, and financial institutions can play a key role in its success. So can consumers.

The benefits of the Treasury's easy-to-use, low-cost Electronic Transfer Account, or ETASM, are many. Millions of federal benefit, wage, salary and retirement recipients can receive their money electronically rather than by check. Furthermore, banks, savings and loans, and credit unions can use the ETA program to extend their financial services to a wider range of potential customers.

A new product for new customers

As required by the Debt Collection Act of 1996, most federal payments, except for tax refunds, must now be made via electronic funds transfer. In response, the Treasury designed ETAs for federally insured banks, savings and loans, and credit unions. Financial institutions can become official ETA providers by signing a Financial Agency Agreement with the Treasury.

The ETA program allows financial institutions to increase a community's access to financial services and tailor the ETAs to their community's unique needs (as long as the basic attributes remain), such as accepting deposits other than federal payments and offering interest-bearing or non-interest-bearing accounts. They can close accounts for misuse or fraud.

Banks, savings and loans, and credit unions will receive a one-time setup fee of $12.60 for each new ETA. Financial institutions that provide ETAs may receive credit under the Community Reinvestment Act service test.

To support financial institutions, the Treasury is providing free in-bank materials for consumers and conducting a nationwide marketing campaign to get qualified people to open ETAs. Financial institutions can call (888) 382-3725 to find out more about the program or request an ETA enrollment kit.

Consumers will get a safe, simple method for electronic deposits

Conference Proceedings Available

The Federal Reserve System produced a book from the March 1999 conference entitled, "Business Access to Capital and Credit," which includes the full text of working papers on the subject. Copies are available from this Reserve Bank at no charge, while the supplies last. Reserach papers are also available from the internet at

Through the ETA program, federal recipients can enjoy the safe, simple and secure benefits of having their payments deposited electronically directly into their accounts. Potential customers who open ETAs can gain access to financial services at a reasonable cost and benefit from the same consumer protections afforded other account holders at the same institution.

ETAs require no minimum balance, unless required by law; allow for cash withdrawals and Point of Sale (POS) access (if available); and provide account holders with monthly statements. There is a monthly maintenance fee of $3.

People who want ETAs for their federal payments should contact an ETA provider to sign up. By calling toll free, (888) 382-3311, they can reach a voice response system that will allow them to locate a list of participating financial institutions by entering a five-digit ZIP code. An Internet site,, allows consumers to search for the providers by ZIP code, city, state or financial institution name.

Now, thanks to ETA, federal recipients will no longer have to worry about cashing their checks, and financial institutions can expand their product lines and serve their communities better.
Reprinted by permission, Federal Reserve Bank of Dallas

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