Military has smart-card idea in store for recruits

To automate payroll and registration for recruits, the Financial Management Service and
the Defense Finance and Accounting Service are issuing smart cards to recruits at Lackland
Air Force Base, Texas.


The Lackland program kicks off a militarywide initiative. The Defense Department plans
to eliminate checks and cash as the chief payment methods for recruits at Army, Navy and
Air Force training posts, said Gary Grippo, FMS program manger for electronic money.


Grippo said the switch to smart cards will happen over the next 18 months. Paying
recruits poses payroll problems for all three services because the recruits usually do not
have local bank accounts, he said.


Unlike the general-purpose Multitechnology Automated Reader Cards, which DOD also has
tested for use as base purchase cards, Lackland’s Visa Cash card is a reloadable
stored-value card that is integrated with DFAS’ mainframe accounting system.


NationsBank Corp. of Charlotte, N.C., the project’s financial contractor, expects
to issue about 40,000 of the cards per year.


The Air Force program follows three Army pilots at Fort Knox, Ky., Fort Leonard Wood,
Mo., and Fort Sill, Okla.


“We learned what we needed to about the technology” in the Army pilots,
Grippo said. He cited two primary lessons:


Given the option of using a smart card or paying cash for purchases, consumers
generally use cash, Grippo said.


But if the smart card is mandated in a closed environment such as a military base, it
will work as a cash alternative, he said.


The military wants to get rid of paper payrolls for recruits. Most military personnel
receive their pay as direct deposits from the Treasury Department.


But because recruits stay at training locations for short periods, they usually
don’t set up direct-deposit accounts, Grippo said.


Cash, money orders, vouchers, checks and military scrip are too cumbersome and
expensive, he said.


The recruits can download their pay to Lackland’s smart cards and make purchases
on base.


The cards replace an aging automated teller machine system at Lackland that dispensed
cash to recruits.


A server running Microsoft Windows NT will bridge the DFAS mainframe system and the
smart-card system.


The server will download a roster of incoming recruits from the mainframe each day,
assign numbers to the recruits, pass the numbers to a card embosser and upload them to the
mainframe.


DOD will initially load each card with a $250 pay advance to cover a recruit’s
immediate expenses.

About the Author

William Jackson is a Maryland-based freelance writer.

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