Indiana and debit cards..

[Rifkinn]

Well, today I have learned that Indiana is going to be using prepaid visa debit cards to pay ppl their unemployment insurance payments as well as child support payments starting in November.  They claim an estimated savings of $1.6 million a year. 
http://www.workforceatm.org/articles/template.cfm?results_art_filename=in_creditcards.htm
http://www.jobbankusa.com/News/Unemployment/unemployment_debit_cards.html

The department has awarded Affiliated Computer Services Inc. a contract to manage the new system. Unlike a typical state contract, the state will pay ACS nothing to offer the debit card program.

ACS, which will operate the call center, will realize its profits through merchant and transaction fees commonly associated with credit and debit card programs. ACS also is part of a team led by IBM Corp. that is negotiating to take over the application process for food stamps and other welfare benefits in Indiana.

I can see in the future that this can have more control/restrictions placed on it. 
Next step could be a card you can't take to a bank and cash out, "anonymous" data collected on what is purchased to outright restrictions on what you can and can't buy.

[error]

I keep a loose eye on the stored value card industry. I can tell you I've already seen prepaid Visa/MC debit cards which only can be used at points of sale; they don't work at ATMs. They're pretty rare, though, and from what I can tell, quite unpopular.

[Spencer]

Oregon's food stamp program has been doing this for a few years now.  They call it an "Oregon Trail" card and people use it on the little credit / debit card terminal at the check-out line at grocery stores.

[Rochelle]

Not a governmental agency, but Cingular gives you debit cards if you do mail-in rebates.
Debit cards are getting more and more common these days and it's probably good governments are going with it instead of remaining out in the woods as most are apt to do.

[PinoX7]

I love food stamps

[error]

I love food stamps

Support your local black market!