Mailboxes not needed for government checksToday the Treasury Department will announce that all payments from the U.S. government will be made electronically to consumers. So people receiving Social Security, Supplemental Security Income, Veterans, Railroad Retirement and U.S. government benefit recipients will receive benefits either through direct deposit into a bank account or through Treasury's Direct Express debit card.

"Today's announcement is a win-win for the American public because it makes government more convenient and cost-effective while generating significant savings for the country," says OMB Director Peter Orszag about the program that is estimated to save the government $303 million in the first five years – including $48 million annually on postage. "This is precisely the type of smart, streamlined improvement that this Administration is committed to making across government to boost efficiency and modernize how we do business."

Some experts wonder, however, how easy adapting will be, particularly for those seniors who haven't gravitated to direct deposit or debit on their own.

Some 85% of seniors already receive their Social Security payments online. For some of the rest, making the change might be a little daunting says James Van Dyke of Javelin Strategies, a researcher in the field. There are people who are consciously concerned about security, he notes, but there are others who are creatures of habit. They may work in high-tech fields with high-tech clients but they still go into bank branches to get cash. "People are wedded to the past for their financial services more than in other industries," he says. "They choose their bank because it was their parents' bank. And they have a tactile thing about a piece of paper."

David Certner, Legislative Policy Director for AARP, agrees. "This will be a challenging transition for those who have been receiving Social Security for years and are not familiar with the [new options]," he says. Particularly for the unbanked – about 4 million of whom already receive Social Security. For those who are patronizing often-pricey check-cashing outposts, the debit card (which allows one free cash withdrawal from an ATM per pay period with additional ATM uses at 90 cents apiece) will be a savings. But not all unbanked seniors go that route, he notes. Some banks will cash the checks. Some grocery stores, as well. That represents a change.

The Treasury Department, noting that there are already one million of the debit cards in use, has several mechanisms in place to make for easier adoption. First, a leisurely timetable. New recipients of Social Security and other government benefits as of March 1, 2011 will receive their benefits electronically. If you're already receiving benefits, you have until March 1, 2013 to convert (though you could choose to do so tomorrow.) A call center will be staffed to answer questions.

Finally, there's the argument from a new piece of Javelin research – and it's one that reluctant seniors may not believe until they make the switch – that going paperless makes you happier. Clear the clutter, it seems, and you can stop focusing on unpaid bills and other tedium. Moreover, going paperless reduces – by half – the dissatisfaction that consumers have with whomever is sending the paper to begin with: banks, cable companies, telcos, etc.

Whether the halo effect extends to the folks in Washington remains to be seen.

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