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Details are being made available as to how the Department for Work and Pensions (DWP) intends to ditch giro-cheques and order books by 2005, a process that has already begun. The aim is to have almost all benefit and tax credit payments made by automated credit transfer straight into bank accounts. At present, only 40 per cent of payments are made that way. Given that 20 per cent of benefit claimants do not have a bank account, there is a long way to go in a relatively short time.

It is planned that claimants will be able to use the Post Office to access their own bank accounts. However, this will possibly be limited to basic "starter" bank accounts, rather than normal current accounts. If the claimant doesn't want to have or can't get a bank account, they can open a Post Office card account. But this will only accept payments from government agencies.

Claimants will go to the Post Office and hand over their card at the counter, which will then be swiped. The claimant will then type in their PIN on a keypad on the counter - more than 4,000 keypads are currently being installed. Each Post Office will carry spare cards so a lost card should be instantly replaceable. However, forgotten PINs will take up to three days to replace.

Other concerns include:

• Access and security for people with sensory impairment, mental health problems or learning difficulties.
• Security of third-party encashment: for example, relatives or home carers who cash clients' benefits.
• Benefit books are often used as a "passport" or evidence for free or subsidised services such as leisure cards, educational awards, local authority charges, and so on.

The DWP has said no clients will be compelled to open an account - but the Inland Revenue can't give a similar guarantee, as the legislation governing the new tax credits is specific. Any income support claimant, for example, caring for a child, will be effectively compelled to open an account within eight weeks of child tax credit beginning in April 2003. If they don't, the child tax credit won't be paid. The same applies for working people who claim working tax credit from April 2003.

A DWP document, Customer FAQs and Generic Messages, states: "If the customer shows they are truly unable to open any kind of account, including a card account at the Post Office, the Inland Revenue will consider, on a case-by-case basis, whether their tax credit will be paid via giro-cheque." It will be interesting to see if the Inland Revenue abides by this limited concession.

For those getting social security benefits and who are unable to open any kind of account, the DWP is looking into some kind of "exceptions service". No other information on this has been forthcoming.

The task of converting from giro-cheques and order books to bank accounts has been given to two companies - Schlumberger Sema and Vertex - although the DWP will be responsible for the scripts used by staff when a claimant calls for information. Veterans Agency (war pensions) mailing started in mid-October, and mailing to the first batch of 128,000 child benefit recipients started soon afterwards. Pensioners are being dealt with in groups - beginning with younger pensioners, who the DWP feels may more easily deal with the change than older ones.

Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care.