Government check in the mail? No, on a debit card.

When Crusberto Muñoz opened his unemployment benefits letter early in January, he didn't find a check. What popped out instead was a Visa debit card loaded with $116.

The Muñozes were perplexed. When his Pendleton, Ore., firm laid him off temporarily last year, Mr. Muñoz had gotten his unemployment deposited directly into his bank account. Why the card this time? Virginia Muñoz read and reread the letter. She found that the debit card, issued by U.S. Bank, came with fees: $1.50 for using an ATM outside U.S. Bank's network, a fee for making more than two withdrawals a month, and most galling of all, a provision to opt in for overdraft protection that, if used, would cost $17.

"The Federal Reserve called the banks' use of the overdraft fees 'abusive,' " she writes in an e-mail. "But for some reason, the government has decided that it's not 'abusive' for unemployed people to have overdraft coverage." The Muñozes ignored the card and applied for direct deposit.

That small act of defiance comes in the face of a blizzard of government-sponsored plastic. For years, states, along with Uncle Sam, have been urging recipients of government aid to accept electronic payments because they're cheaper than paper checks. For most people, that meant direct deposit into a bank account. But the holdouts who didn't want it or didn't have an account still got checks. Then governments found a substitute: debit cards, which they began sending to holdouts – from foster parents to state prisoners. By 2009, 30 states already had deals in place to replace unemployment checks with debit cards, according to The Associated Press. They were joined by South Carolina and California last year. In December, the US Treasury Department said it would phase out paper checks for new Social Security applicants starting in May. Earlier this month, it announced it was testing a similar move for income tax refunds.

While the cards have great appeal – the money comes faster and there are no hassles with lost or stolen checks – they have also generated controversy. Some recipients complain it is unfair for the government to offer benefits to the neediest Americans with one hand and then take some of it back through fees. Another concern: Does government money in the form of a debit card encourage undue spending?

"It is safer than cash and the fees are lower than check-cashing operations, which means you can keep more of your money," said Bill Hardekopf, chief executive officer of credit-card website LowCards.com, in a statement. But "studies show that people tend to spend more freely with a debit card than paying with cash."

The move to government electronic payments is global. Of 40 social-transfer programs launched by nations in the past decade, nearly half featured electronic delivery, according to a 2009 report by Consultative Group to Assist the Poor, an independent policy and research center in Washington, D.C. Such moves are largely popular because ATMs, where electronic payments can be turned into cash, are more accessible than a bank or a government office. In the United States, the big driver is costs.

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