Tiddlywinks, tokens -- or library cards

250,000 benefit claimants who receive their money in the form of Giro cheques will soon be moved to a different dort of payment. It will happen at shops which display the PayPoint logo, but how will it work?

The Department for Work and Pensions says benefit recipients will get a "token", but officials are very cagey about what form that will take.

It appears that the new system hasn't yet been fully worked out.

Is the token like a tiddlywink? Probably not.

Is it a swipe card, which will have personal information stored on it? We don't know.

The token would have a reference number or bar code on it, I understand. And claimants or their carers would need to show I.D. as well.

This is what PayPoint says: "Similarly to the cheque payments which are being replaced, customers will be supplied with a document to confirm their entitlement that can be cashed in a PayPoint retail outlet."

This sounds a bit like a paper voucher, a cheque by another name. Only a cheque has to go through the costly cheque clearing system.

Cheques are open to fraud, says the DWP, but might not the vouchers be open to fraud as well?

Another thought: it sounds as though claimants or carers would have to register with a particular PayPoint outlet, for identification purposes.

So they could choose where to go, but might not be able to use other PayPoint outlets thereafter out of 22,000 available.

UPDATE from Department for Work and Pensions: it's a library card!

"Current system is that we post a cheque to benefit recipients and they take it to the post office to cash it.  They will take the cheque and some form of ID eg driving licence, passport, utility bill etc.


In future people will have a 'token' of some sort - this will be like a library card.   This is a security measure. They will also need some form of ID eg driving licence, passport as above. People will go to their local Paypoint exactly as above, and get their cash."

Blow for Post Office with end of benefit cheques

A new service to replace benefit cheques has been awarded to Citibank which will use PayPoint outlets in shops to deliver the money.

250,000 benefit claimants who receive their money by cheque, cashed the Post Office, are affected.

The decision is a blow to the Post Office which had tendered for the contract.

It will take at least a year for the cheque payments to be phased out.

Nearly 250,000 receive cheques, often because they do not have an appropriate bank account for for direct electronic payment, out of 18 million benefit recipients.

Most of the cheque users are on in-work benefits such as jobseekers allowance or income support. But 60,000 are pensioners and 38,000 are on Disability Living Allowance.

The Department for Work and Pensions also announced a £73m fund to support credit unions, in an effort to provide alternatives to loan sharks.

Ministers expect the Post Office will link to credit unions to provide families with wider access to banking services.

The DWP said Post Office branches could also play a part in delivering the new Universal Credit, which is replacing several benefits. They could add to their current work verifying identities for National Insurance applications and pension claims.