Payment Methods

There are several options to disburse payments to individuals, all of which have different considerations:
● State warrant (check)
● Direct deposit (ACH)
● Prepaid card
● Payment through a local bank account (Imprest account)
● Gift Card

Each method requires the disbursing agency have some infrastructure in place to issue and account for the 
payment. Depending on the payment option chosen and the method of issuance the agency may incur hard 
and/or soft dollar costs. When possible, offer multiple payment options and give members the choice to choose 
the method that works best for them. Agencies should use care when their funding source prohibits showing 
any preference for one vendor over another.

State Warrant (Check)

State warrants, or checks, can be issued through the Agency Financial Reporting System’s (AFRS) Statewide Vendor system (SWV) or through a direct relationship with the Office of the State Treasurer (OST). Warrants must be cashed by the recipient within 180 days of issuance. Warrants older than 180 days are no longer valid. Aged warrants may be reissued, or payment can be made using another vehicle.
 

Recipients of warrants issued through SWV must establish a statewide vendor number. Note: when the payee signs up for a SWV they choose either warrant or Automated Clearing House (ACH) as their method of payment. Agencies that use the A19 Agency may incur minimal fees from AFRS for payment processing.

Statewide Vendor Numbers

A statewide vendor number is required whenever payments are made through the Agency Financial Reporting System (AFRS). AFRS is Washington State’s central hub for accounting information. Requesting a statewide vendor number only needs to be done once, when seeking payment for the first time, however statewide vendor numbers can expire so workgroup members with previously existing statewide vendors numbers should check to make sure their number is still active. Confirm that a vendor number does not already exist by searching the Vendor Number Lookup. If no vendor number exists, obtain a vendor number, by visiting Statewide Vendor/Payee Services | Office of Financial Management (wa.gov). Complete the “Vendor/Payee Registration Form.” For number 3 on the Vendor Registration Form, select the option Lived Experience - Class 1.

Workgroup members have the option of setting up direct deposit to a bank account or receiving a check via mail. Once the form is submitted, the members’ Statewide Vendor number will be sent to the email provided within 3-5 business days.

To issue warrants directly through OST the agency must generate a warrant issue file to communicate the payee information to OST. Implementation of a new warrant issue file takes 3-6 months. Consideration should be given to delivery of the warrant to the payee, by mail or in person. OST’s warrant cashing services have not been reinstated after closing due to Covid. OST has an agreement with US Bank to cash state warrants for individuals at US Bank branches in Washington State. Other companies such as Fred Meyer, Walmart, and others offer check- cashing services for a fee. Recipients must present valid identification at the branch when cashing the warrant.

Challenges include:
● US Bank does not have a branch in all regions of the state, so workgroup members who do not have 
their own bank account to cash checks and also do not live near a US Bank may find it difficult to cash 
their checks
● Intervention by OST and the state’s relationship team is often needed to facilitate the warrant cashing 
process at US Bank
● US Bank may charge the payee a $10.00 fee per warrant cashed
● 3-6 month lag time to set up new warrant issue file is burdensome
● Loss of paper checks is a risk
● Statewide Vendor Number application process is lengthy and confusing for members, places a high 
burden on them.

Direct Deposit (ACH)

ACH can be issued through a Statewide Vendor Number or through a direct relationship with the Office of the State Treasurer. Recipients of ACH must have a domestic bank account and be willing to share their account details with the state to receive funds. In most cases, the requirement under RCW 43.41.180 to complete an Economic Feasibility Study (EFS) is waived by OFM when disbursing payment by ACH.
 

Recipients of ACH issued through SWV must establish a statewide vendor number. Note: when the payee signs up for a SWV they choose either warrant or ACH as their method of payment. Agency may incur fees from AFRS for payment processing.To issue ACH directly through OST the agency must generate an ACH issue file to communicate the payee information to OST. In turn, the agency will receive a file of ACH Returns and Corrections detailing payments 
that didn’t work (Returns) or require updates to the bank information (Corrections). The disbursing agency is responsible for ensuring their program complies with all ACH Rules. Implementation of a new ACH issue file takes 3-6 months. OST does not charge a fee to the agency to disburse payment by ACH. 

Challenges include:
● Collecting and storing recipient bank accounts
● ACH Rules Compliance can be complicated and resource intensive

Prepaid Card

Disbursing payment by prepaid card is a good option for unbanked and under-banked populations. US Bank’s prepaid cards are Visa branded and are accepted anywhere that accepts Visa. Recipients have several options to use the card and/or get cash free of charge, including to the penny withdrawals at most banks. Recipients receive the same fraud protections against unauthorized withdrawals to prepaid cards as traditional 
bank accounts (Federal Regulation E).
 

Federal regulations may require certain disclosures be provided prior to the recipient choosing payment by prepaid card. The bank will review the program specifics to determine if disclosures are required. The disbursing agency enrolls the payee through the bank’s online Admin Portal. The bank creates and mails a personalized, embossed card to the recipient. The recipient must activate the card, either online or by calling customer service before funds can be accessed. Funding the cards is done by direct deposit. The Admin Portal allows the agency to confirm deposits were credited to the card but does not allow them to see any other transactions or activity. Implementation of a new prepaid card program takes 3-6 months for OST to process. An Economic Feasibility Study (EFS) must be completed and submitted to OFM. Agencies are responsible for card issuance fees.

Challenges include:
● Recipients need a physical mailing address to receive the card, bank does not mail cards to P.O. Boxes
● 7-10 business days for recipient to receive card in the mail
● Gift card amounts are often fixed at rates/tiers which A) doesn't neatly align with the changing compensation rates and B) is often difficult to utilize in full and thus not entirely released to the individual.

Purchase and Distribute Preloaded Gift-Cards

Preloaded gift cards that effectively operate like a debit card can be obtained from traditional vendors, such as in-store kiosks. Many preloaded digital gift cards can also be purchased online. These are not to be confused with gift cards that can only be redeemed at a specific store (such as a Starbucks gift card) - cards that are only redeemable at one specific business should not be used as a method of compensation for workgroup 
members.

The State Administrative & Accounting Manual (SAAM) currently requires agencies to use gift cards with no fees associated. If there are fees attached, an EFS would be required. Ability to get cash, including to the penny withdrawals, are governed by the rules of the card purchased. Agencies have several options to purchase preloaded gift cards, such as petty cash or purchase cards, and distribute them to recipients. Agencies should have internal controls in-place for undistributed cards. 

Challenges include:
● Cards are like cash and there is risk involved in mailing cards to private residences; it is therefore recommended to email electronic gift cards OR use certified mail if sending physical gift card through USPS OR utilize Amazon gift cards that can be sent to secure lockers for retrieval
● Potential lack of customer support from issuer if recipient experiences problems. Agency Bank Account Outside the Treasure (Imprest Account)
Agencies may open an account outside the treasury with approval from OFM. Agencies would fund and replenish the account without using a statewide vendor number. Agencies would be responsible for all fees associated with account and products purchased.

Account would facilitate:
● Issuing checks directly from the account
● Utilizing US Bank’s Automated Clearing House (ACH) Origination product to issue direct deposit 
without creating and transmitting a file
● Funding prepaid cards directly through the Admin Portal (requires EFS and OFM approval)
● Access to new same-day payment products such as Real-time payments, Zelle or Venmo

To establish an Imprest Account, agencies will need to submit a request to the accounting division within OFM (ofmaccounting@ofm.wa.gov). Agencies must have an internal policy drafted before final approval is given. OFM will not approve the request for funding without a policy stating how the account will be managed (as well as records of tracking). Keep in mind that policy development and review to approval will require some time. For more information, please see the Statewide Administrative & Accounting Manual (SAAM). 

Third-Party Administrators

Agencies may opt to contract with third-party companies to connect with and compensate eligible members. As there is currently no statewide contract for this work, agencies must follow the Request for Proposal (RFP) process to select an organization to administer compensation. As not specifically authorized by 2SSB 5793, an agency may want to consult with the Department of Enterprise Services (DES), OFM, and their assigned AAG when contracting with a third-party administrator for the first time. See the “Templates & Resources” section for more supportive documentation.

Challenges Include:
● Some of the funds for community compensation will be used to pay for the organization’s payment administration.
● Contracting with a community organization or private company exclusively for this purpose (i.e. not a part of a broader contract) may not be a comfortable or appropriate role for an organization that does not exist solely for this purpose.

Note: Contracting with a third-party administrator would eliminate the need for workgroup members to obtain a statewide vendor number. If possible, agencies are encouraged to use this method to reduce the burden and barriers on volunteers.

Non-Exclusive Third-Party Administrators

Agencies may include the responsibility – and appropriate budgeting – for payments administration as part of a larger scope of work under contract with non-profit community organizations or private businesses. Examples include organizations or businesses contracted for the facilitation of workgroups, conducting community engagement, providing technical assistance, and other scopes of work.

Challenges include:
● Community-based organizations and private businesses may experience financial burdens due to lack of up-front payments or delay in payments may cause strain.
● Online platforms that automate these payments for a large volume of smaller payments often require cost projection and calculation that put an extra logistical challenge on the organization.