Government Prepaid Cards Lower Costs and Improve Access - Report No. 34
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Corporate Partner
Research Series
Advisory Group
Report No. 34 June 2013
Government Prepaid Cards Lower
Costs and Improve AccessAcknowledgements
About the Authors Corporate Partner Advisory Group
Chairman:
Helena G. Sims is a co-author of this report. Most of her 35 years of professional
experience have been devoted to forging partnerships among public and private organiza- Hank Steininger, CGFM, CPA
tions. Since 2007, she has served as director of intergovernmental relations for AGA. Prior H.J. Steininger PLLC
to her work with AGA, she was Managing Director of Public-Private Partnerships for a
banking trade association that played a key role in fostering a nationwide system for the
AGA Professional Staff:
electronic delivery of government benefits. She served as Washington Office Director Relmond Van Daniker, DBA, CPA
for the National Association of State Auditors, Comptrollers and Treasurers and has also Executive Director
worked for the Council of State Governments, the U.S. Senate and the Florida Legislature.
Susan Fritzlen
Helena earned bachelor’s and master’s degrees in speech communication from Florida
Deputy Executive Director/COO
State university.
Steven E. Sossei, CPA, is a co-author and the primary researcher for this report. He is Maryann Malesardi
a retired Director of State Audits from the New York State Comptroller’s Office, where he Director of Communications
worked for 35 years. Steve has extensive experience in auditing all types of government Jennifer Curtin, MPA
and not-for-profit operations. in his role as Director of State Audits, he was responsible for Director of Public Affairs
directing the audits of New York’s Medicaid program, public employee’s health insurance
Joseph Davis
plan and New York City’s school system. He also worked extensively with the National
Marketing & Communications Manager
Association of State Auditors Peer Review program, working on more than 20 peer
reviews during his career. Steve also served as AGA’s Director of Education from 2010
through 2011. He earned his bachelor’s and master’s degrees in accounting from the State
University of New York at Albany.
AGA is proud to recognize VISA for supporting this effort.
Visa is a global payments technology company that connects consumers, businesses,
financial institutions and governments in more than 200 countries and territories to fast, secure
and reliable electronic payments. We operate one of the world’s most advanced processing
networks—VisaNet—that is capable of handling more than 30,000 transaction messages a
second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards,
extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer
consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information,
visit corporate.visa.com.
AGA’s Corporate Partner Advisory Group Research Program
One of the roles of professional mission of advancing government make AGA a leading advocate for
associations like AGA is to develop accountability. improving the quality and effective-
new thinking on issues affecting those AGA has been instrumental in ness of government fiscal admin
we represent. This new thinking is assisting with the development of istration and program performance
developed out of research and draws accounting and auditing standards and and accountability.
on the considerable resources and in generating new concepts for the Our Thought Leadership Library
experiences of our members and effective organization and administra- includes more than thirty completed
counterparts in the private sector – tion of government financial manage- studies. These in-depth studies are
our Corporate Partners. These orga- ment functions. The Association made possible with the support of our
nizations all have long-term com- conducts independent research and Corporate Partners. Download compli-
mitments to supporting the financial analysis of all aspects of government mentary reports at www.agacgfm.org/
management community and choose financial management. These studies researchpublications.
to partner with and help AGA in its
2 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHTable of Contents
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Ongoing Electronic Revolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Objectives, Scope and Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interview Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Emergence of Prepaid Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redistributing the Workload. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Financial Foundation for Prepaid Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Experiences with Prepaid Debit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Florida’s Department of Economic Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Washington State’s Division of Child Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Oklahoma’s Tax Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Treasury’s Financial Management Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Understanding the Move to Prepaid Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cost: The Primary Driver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Access: Also a Motivator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Security: Safeguarding Payment Recipients and Their Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Studies on the Use of Prepaid Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Costs Savings for Cardholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Other Card-Related Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Education and Training Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Branding the Card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Future Uses of Prepaid Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Appendix A: Officials Interviewed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Government Prepaid Cards Lower Cost and Improve Access 3Executive Summary
For decades, governments have charged to cardholders are lower on reduced because, unlike checks, they
sought to maximize the use of electronic average for prepaid debit card transac- do not have to be mailed every time a
payments and minimize the use of paper tions than they are for cashing checks. payment is made, recipients do not have
checks when making payments to indi- We learned that a prepaid debit to carry large amounts of cash after
viduals. While direct deposit has been card program can be implemented at cashing a check and government card-
the preferred method for making elec- no or low cost to government agencies holders are given the same consumer
tronic payments, it can only be used with and that cost-savings was the major protections available to all other debit
individuals who have a bank account. It motivator for eight of the 10 govern- cardholders. While information is avail-
is estimated that 1 in 12 households in ment agencies interviewed. According able on government savings, minimal
the United Sates do not have the option to a U.S. Treasury press release issued information has been available on the
of receiving payments via direct deposit in 2010, the FMS is projected to save cost impact for cardholders. We sought
because they are unbanked, meaning an estimated $1 billion over the next to compare fees paid by cardholders to
they don’t have a bank account. As a 10 years by moving Social Security, access their cash via prepaid debit cards,
result, a number of government agencies Supplemental Security Income and compared to cashing a check. Based on
have adopted a prepaid debit card as other paper check payments to prepaid a report issued by the Federal Reserve
a way to make electronic payments to cards. Board of Governors and publically
these unbanked individuals. Other major reasons that govern- available research on check-cashing
AGA conducted this research to ments switched to prepaid debit fees, we estimate that unemployment
understand the underlying factors that cards included better cash access and compensation benefit recipients saved
influenced governments to implement improved security for recipients of gov- between $100 million and $389 million in
prepaid debit card programs, the degree ernment payments. Government agen- 2011 by using prepaid debit cards versus
of satisfaction with the programs and cies saw the cards as a way to increase check-cashing services. On an individual
the benefits derived from them. This the options available to the unbanked for basis, the cost of check-cashing services
research is based on interviews that accessing funds. With a prepaid debit are significant as well. An announce-
AGA staff conducted with 10 govern- card, government cardholders have the ment by District of Columbia’s Mayor
ment agencies that implemented a pre- same access that all other cardholders Vincent Gray during, ‘Financial Literacy
paid debit card program We interviewed have to automated teller machines Awareness Month’ stated that almost 25
nine state agencies within eight states. (ATMs) and retailers that offer cash back percent of D.C. residents are unbanked
We also interviewed one federal agency, with purchases. Cardholders have the or underbanked, and that these resi-
the U.S. Department of the Treasury’s flexibility to access some or all of their dents pay an average of $800 per year in
Financial Management Service (FMS).1 funds at one time and, even though their check-cashing fees.
All of the agencies interviewed, were card is not tied to an individual bank
pleased with their programs. They said account, they have the option of going Conclusion
that the prepaid debit card programs into a bank to obtain cash from their In summary, we found that govern-
saved the government money and card. Cardholders can make purchases ments and the recipients of government
enhanced client service in a number of at any retailer that accepts the brand payments derive significant benefits by
ways. The programs made it possible displayed on their card (i.e., Visa or using prepaid debit cards in lieu of paper
for governments to make electronic pay- MasterCard), and can shop and pay bills checks. Given the documented savings,
ments to those without bank accounts, online or by phone, thereby taking major governments would do well to assess
they are widely-accepted by retailers, steps into the financial mainstream. any remaining paper-based payment pro-
they provide added security for card- Prepaid debit cards are more secure cesses to determine whether additional
holders and they provide widespread than checks in a variety of ways. The savings might be possible by converting
access to cash. In addition, the fees risk that a card will be lost or stolen is to electronic payment methods.
4 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHIntroduction
We live in a world where technol- disadvantages for the recipient in that direct deposit. Governments that want
ogy is ushering in new ways of doing that checks must be negotiated in some to limit the issuance of paper checks
business and communicating with one manner for their holders to receive must therefore consider alternatives to
another. Political campaigns use Twitter payment. Individuals without bank direct deposit.
to communicate instantaneously with accounts have to locate a bank to cash Governments have taken steps to
supporters, Facebook connects people the check or use an alternative outlet, expand the use of electronic payments
into communities across the world, and such as a check-cashing operation. The beyond direct deposit. The most note-
the internet allows people to work virtu- individual must then secure the cash worthy example involved the Electronic
ally from almost anywhere. until it is used, presenting an element Benefits Transfer (EBT), which state
The banking community was one of risk. During our interviews, the U.S. governments began implementing in
of the first sectors of the economy to Department of the Treasury (Treasury) the 1990s. All states now have an EBT
embrace electronic technology. The officials stated that it costs $1.05 to issue program, whereby benefits are provided
payment security offered by bank-issued a check. Check issuance cost may not to recipients on a debit-type card,
credit and debit cards is the financial seem very large when looked at singly, primarily for access to food stamps,
engine powering the growth in online but costs quickly add up when millions which is now called the Supplemental
sales today. Since the 1970s, direct of checks are issued. Nutrition Assistance Program (SNAP). To
deposit has freed bank customers from Direct deposit has been the preferred redeem SNAP benefits, recipients swipe
the need to stand in line to deposit method for making government pay- their EBT card at a retailer and enter a
payroll checks. ATM’s and cash back ments to individuals for years. direct unique personal identification number
at point-of-sale have reduced the deposit payments are made using the (PIN) to authorize payment for eligible
need for individuals to go to banks to Automated Clearing House (ACH) net- items. EBT cards are also used by some
withdraw cash from their accounts. The work, which routes electronic payments states to provide Women Infants and
financial services industry continues between banks and into an individual’s Children (WIC) benefits.4 While EBT
to revolutionize the way people do bank account. Although direct deposit has been an unquestionable success in
business today. is the preferred method for making eliminating coupons under the SNAP
government payments, it has one program, it is not an ideal solution for
The Ongoing Electronic significant drawback in that it only works cash benefits. Cash access under EBT is
if the recipient has a bank account. A limited because it operates on a closed
Revolution significant portion of the population of network, which provides more limited
Electronic payments are making the United Sates is unbanked, meaning access to cash benefits than commercial
checks obsolete.2 Issuing paper checks is they live in a household that does not debit networks and operates under a
a labor-intensive and costly way to make have a bank account. A 2011 Federal unique set of rules which limit access
government payments. Absent direct Deposit Insurance Corporation (FDIC) and availability to recipients.
deposit, government programs have tra- study found that an estimated 8.2
ditionally issued checks to individuals. percent of U.S. households (or one in
At a minimum, issuing checks requires twelve) are unbanked.3 In addition, the
the government agency to purchase study estimated that an additional 20
secure check stock and develop pro- percent of U.S. households are classified
cesses to print, sign, secure and mail the as underbanked, meaning they use few
checks. It also requires that processes traditional financial services such as
are in place to reissue and reconcile credit cards and checking accounts. With
lost or stolen checks. Checks are costly no or limited banking services, these
in terms of supplies, equipment and two groups are not good candidates for
manpower. Checks have additional
Government Prepaid Cards Lower Cost and Improve Access 5Objectives, Scope and Methodology
The objectives of this research were use of prepaid debit cards, we limited government agencies — nine at the state
to understand the underlying factors our research to unemployment benefits, level and one at the federal level. Two
that influenced governments to imple- child support payments to custodial of the state-level agencies were in the
ment prepaid debit card programs, the parents and tax refunds. At Treasury, same state, California. These interviews
degree of satisfaction with the programs we included the Direct Express program, were conducted between November 1,
and the benefits derived from them. Our which is used to provide a wide range 2012 and February 28, 2013. The officials
research encompassed the prepaid debit of payments to individuals, includ- interviewed are listed in Appendix A. We
card program operated by Treasury ing Social Security, Supplemental used a standard set of questions for our
and programs in eight states selected Security Income (SSI), and other interviews. We also reviewed other rel-
by our researchers. All of the prepaid federal benefit payments. evant research documents and reports
debit cards in our study were issued by Interviews were our primary method to ascertain the concerns and issues
a bank, and branded either by Visa® or of obtaining information for this study. associated with the use of prepaid debit
MasterCard®. In reviewing the states’ We interviewed officials from 10 cards by government programs.
Interview Questions
Decision to Move to by prepaid cards last fiscal year? 10. When implementing the
program, what was the most
Prepaid Card System and 6. Has your organization realized difficult part of the changeover?
Implementation of System the cost savings it estimated it
would receive by implementing 11. What part of the change over
1. What factors led to your the prepaid debit card program? process presented the largest
decision to move to a prepaid Have you incurred additional risk to the implementation
debit card system? unplanned costs? How much? was the riskiest for your
organization?
2. When did your prepaid card 7. Has your organization
program become operational? experienced the other benefits 12. How do the cardholders feel
it sought when moving to the about the prepaid cards?
3. In general terms how did you prepaid debit card system?
select a vendor? 13. What would you do differently
8. Overall, are you satisfied if you had to implement a
4. How many types of cards does with move to a prepaid debit prepaid card program again?
your program use? card program for distributing
benefits or funds? 14. Are there other programs you
Operation of System – want to convert over to the
9. Are there areas or opportunities prepaid debit card program?
Experiences for improvement that you see in
5. What is the total amount of funds the program?
distributed under your program
6 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHThe Emergence of
Prepaid Debit Cards
The first breakthrough for making recipients and they provide widespread pay for purchases and to receive cash
electronic payments to the unbanked access to cash. In addition, as docu- back. A significant difference is that a
on a wide scale began making headway mented later in this report, fees for card- government-issued prepaid debit card
in the early 2000s. This solution was holders to access their cash are lower on is not linked to an individual’s bank
the prepaid debit card. The emergence average than check cashing fees. account. Instead, it is linked to a master
of commercial prepaid debit cards A government-issued prepaid debit account maintained by the bank that
was significant because they allowed card works very much like a regular issues the card (Issuer). Government
governments to make electronic pay- debit card. It may be used at an ATM agencies contract with Issuers to imple-
ments to people who do not have bank to withdraw cash, at any store that ment their prepaid debit card programs.5
accounts, they are widely accepted by accepts the appropriately branded credit See Figure 1.
retailers, they provide added security for or debit card (Visa or MasterCard) to
Figure 1: Government Prepaid Card Funding Flow
Government Agency Bank/Program Cardholder
• Develops ACH funding Manager
file* using detail from
enrollment file and sends
it to the Depository Bank Depository Bank
reviews and transmits
• The Agency can use file to ACH operator
their exisitng bank
account — no new • Make purchases and pay
account set up required ACH operator distributes bills everywhere Visa®
funds to Bank/Program Debit cards and Debit
Manager MasterCard® are accepted
• Confirms file receipt • Access cash at ATMs and
• Confirmation report of from tellers at member
successful deposits banks and credit unions
• Deposits funds to card
account — funds typically • Get cash back with
available to the cardholder purchase at particpating
by the next business day merchants
Source: Alpha Group LLC
To the cardholder and the merchant, population, including the unbanked and frequency and initiating payment to the
the prepaid debit card looks and func- the underbanked who may not have, nor recipient, by sending an ACH file to the
tions just like a standard debit card. To qualify for, a checking account. bank. The bank assumes responsibility
the government, it works just like direct Figure 2 illustrates the responsibili- for card issuance, basic administrative
deposit, with the associated low cost ties and roles in a prepaid debit card pro- functions like retaining the cardholder’s
and reliability. But the prepaid debit card gram. The government retains responsi- balance and resolving errors that occur
can be used by a broader segment of the bility for determining eligibility, payment in the process of disbursing funds.
Government Prepaid Cards Lower Cost and Improve Access 7The Emergence of Prepaid Debit Cards
Redistributing the responsibilities. While the government regarding card use and the replacement
remains responsible for customer of a lost/stolen card, thereby reducing
Workload service questions about eligibility and/ the burden on governmental entities
Adopting a prepaid debit card system or benefit levels, the bank or program replace lost or stolen checks. Check
to replace paper checks will result in manager assumes significant customer replacement services are a staff-
some changes to traditional government service responsibility related to the flow intensive operation for a government
roles and responsibilities. As depicted of funds, error resolution and account agency because it involves investigating
in Figure 2, some tasks may be assumed balances. Issuer-provided customer ser- whether the check has been cashed and
by the issuing bank or program man- vice is typically available over the phone re-issuing a replacement paper check.
ager, thereby allowing the government and on the Internet, where cardholders The government agency would remain a
agency to reassign staff to perform are able to perform basic functions, such secondary point of contact for answer-
other program or agency functions. For as making address changes. Issuer cus- ing questions regarding benefit eligibil-
example, banks and program managers tomer service operations are typically ity and levels.
assume additional customer service the first point of contact for questions
Figure 2: Government Prepaid Card Program Responsibilities
Government Agency Bank/Program Cardholder
Manager
Enrollment Enrollment Funds Access
• Individual files sent online • File acknowledgment and • Use card to make purchases and
real time or by batch daily/ acceptance pay bills everywhere Visa® Debit
weekly cards and Debit MasterCard®
Card Issuance are accepted
• Access cash at ATMs and from
tellers at member banks and
Funding* Funding credit unions
• ACH funding file developed • File confirmation • Get cash back with purchase at
using detail from enrollment • Card deposit particpating merchants
file Depository
Bank
Transaction Processing Account Management
• Online and mobile phone
• Load, balance and transaction
File Management File Management
information
• Demographic updates • Demographic updates
• Program reporting Customer Service
Administration • Typically 24/7, 365
Administration
• Card status reporting • By phone and online
• Card status reporting
• Online adjustments • Online adjustments Protection
• By-case cardholder review • By-case cardholder • Regulation E
review • Zero Liability
• Regulation P
Customer Service Added Value
Protection • Financial literacy education
Added Value • Merchant offers and discounts
Source: Alpha Group LLC
Prepaid debit card holders typically up for email (and often text message) always be predictable. Many prepaid
receive more services than are avail- notifications that funds have been debit card arrangements also provide
able to check recipients. For example, placed onto the card. This allows them additional cardholder services. For
cardholders can generally opt to receive to access their funds as soon as they example, an Issuer may provide financial
automatic notifications when a deposit are available. This feature is particularly literacy services for its cardholders and
has been made to their prepaid debit helpful to custodial parents receiving retailers may offer discounts on pur-
card. Most prepaid debit card arrange- child support payments, because the chases made with the card.
ments allow the card recipient to sign intervals between payments may not
8 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHThe Emergence of Prepaid Debit Cards
The Financial Foundation proposition for various parties involved low cost. Cardholder fees are deducted
in a government prepaid debit card from the cardholder’s available balance.
for Prepaid Cards system. Under provisions of the Dodd- Cardholder fees could include out-of-
An underlying premise in moving to Frank Act, the Federal Reserve Board is network ATM fees, balance inquiry fees,
prepaid debit cards is that the program required to report annually to Congress over-the-counter (OTC) fees, account
can be implemented at no or low cost to on government prepaid debit card servicing fees, routine monthly fees,
the government, and that cardholders programs and their associated fees. customer service inquiry fees, penalty
will incur little or no cost in access- The first report, prepared in 2011 was fees and overdraft fees. All fees are
ing their funds. A prepaid debit card based on 2010 data.6 The most recent disclosed to the cardholder through
program, even if free to the government report, issued in 2012, provides infor- the terms sent with the new card. They
agency, is operated at a cost to the mation based on 2011 data. The 2012 should also be posted on the govern-
Issuer. As a commercial venture, the report compiles information reported ment agency’s website.
card Issuer must do more than cover by government program officials for As stated above, the 15 Issuers for
its costs to stay in business; it has to 158 federal, state and local payment government prepaid programs reported
make a profit. It begs the question, how programs as well as from the 15 large that in 2011 they received $120 million
are prepaid debit card programs able card Issuers in the United States. in cardholder fees. The Federal Reserve
to save governmental entities money, These 15 card Issuers account for more Board calculated this equated to an
and also offer cardholders the ability to than 90 percent of the cards used in average of $6.33 per card, or 0.3 percent
access their benefits at little or no cost? government-administered prepaid debit of the dollars disbursed through govern-
The answer is that Issuers earn revenue card programs. ment payment prepaid debit cards annu-
from a number of sources: According to the 2012 report, the ally. ATM fees ($59 million) comprised
Interchange fees — Fees are paid to largest source of revenue for Issuers the largest portion of total cardholder
the issuing bank for its involvement of government prepaid debit cards was fees. There are significant variations
in an electronic transaction. The interchange fees charged to merchants among the fees paid by cardholders in
fees are a payment from a merchant ($208 million), followed by cardholder federal and state programs, with the
to the issuing bank because, fees ($120 million). Information was higher fees paid in state programs.
whereas the fee is charged by the not requested on any interest earnings Figure 3 from the 2012 Federal Reserve
payment card network (i.e., Visa for the funds associated with prepaid Report, captures information on the
or MasterCard), it is made by a debit cards. The 2012 report states that range of cardholder fees reported by
merchant’s bank and the amount of interchange fees averaged 1.1 percent Issuers on prepaid debit card programs
the fee is passed on to the merchant. of the transaction amount, which is for various categories.
Interest — The Issuer holds consistent with the level reported in the
cardholder funds until they are 2011 report.
accessed by the client and the bank The cardholder fees, which provide Contracts between
is able to invest the funds in the Issuers with their second largest source governments and
meantime. of revenue, vary by program and are Issuers attempt
Cardholder fees — Any fees charged established through the contract with
to strike a balance
by the Issuer to the cardholder for the government agency. These con-
using the prepaid debit card. tracts are awarded through a competi- among the Issuers’
In contrast to these revenue sources, tive process. need to make a profit,
there are also expenses for the Issuer. Decisions that cardholders make in the governments’
The Issuer pays fees to third parties accessing their funds affect the amount interest in reducing
to compensate them for participation of cardholder fees that an Issuer earns.
For example, cardholders can avoid an
costs and the ability
in the transaction. Typical Issuer fees
include those paid to other banks or out-of-network fee by using in-network of cardholders to
ATM owners to compensate them for ATMs. Contracts between governments access their funds at
the cardholders’ use of their hardware and Issuers attempt to strike a balance no or low cost.
or services. among the Issuers’ need to make a
An annual report issued by the profit, the governments’ interest in
Federal Reserve Board provides reducing costs and the ability of card-
insights into the economics and value holders to access their funds at no or
Government Prepaid Cards Lower Cost and Improve Access 9The Emergence of Prepaid Debit Cards
Figure 3: Range of Reported Average Cardholder Fees for Government Prepaid Debit Cards
Type of Cardholder Fee Federal Programs State/Local Programs
Purchase Transactions None $0.13–$1.50a
ATM $1.00–$3.84b $0.77–$3.49
Bank OTC $1.00–$1.57b $1.00–$15.00
Customer Service Inquiry $1.00–$1.00b $0.16–$2.56
Source: Board of Governors of the Federal Reserve Board
a. This data applies to only 25 of the 158 programs included in the 2012 survey and fees were only assessed on 10
percent of the transactions within the 25 programs.
b. FMS officials reported that the fees associated with the Direct Express card are lower than the amounts
included in the Federal Reserve report. The ATM fee, where imposed, is $0.90 per transaction, and there are no
OTC or Customer Service fees associated with the Direct Express card.
It should be noted that Issuers did about overall satisfaction with the pro- a contract in 2009 with a start date of
not charge cardholder fees on most gram, lessons learned in implementa- December 31, 2010.
transactions. The averages in Figure 3 tion, client satisfaction and cost. Because DEO officials said three primary
were computed based on the revenues of the similarity of experiences reported, factors influenced the move to a prepaid
received and the number of times the fee we provide detail on only four of the debit card system:
was charged. It does not represent an government agencies interviewed. We 1. Go paperless. An initiative by Florida’s
average cardholder fee per transaction. use tables, rather than text, to illustrate legislature to move government
For example, Issuers reported they did information on cross-cutting issues that operations into a paperless
not assess fees on approximately 60 affected all programs. environment at no cost to the state.
percent of cash withdrawals at ATMs,
2. Improve access. To improve the
or on 87 percent of cash withdrawals Florida’s Department of
Economic Opportunity unbanked or underbanked claimants’
at bank tellers. Thus, most transactions
access to benefits. DEO officials said
involve no fee to the cardholder. Florida’s Department of Economic
that cards provide better access to
The Federal Reserve Board’s study Opportunity (DEO) administers Florida’s
benefits than a check. Access to cash
did not account for the interest Issuers Reemployment Assistance program,
was especially problematic in rural
earned on government deposits prior to which was called Unemployment
areas, with a limited number of banks
withdrawal by cardholders. A cardholder Compensation until 2012. The program
and other cash access points. Officials
may withdraw the funds as soon as they provides temporary wage replacement
said that prepaid cards also help the
are credited or the funds may be left on benefits to qualified individuals who
unbanked and under banked avoid
deposit. The amount of interest earned are out-of-work. Florida requires that
check-cashing fees.
by the Issuer will vary based on a variety all claims for benefits be filed online by
the claimant and that claimants recertify 3. Add security. Rather than having to
of factors, including:
their eligibility for benefits every two cash a check and carry the entire
the amount deposited; amount of the benefit with them,
weeks. Prior to offering a prepaid debit
how quickly the cardholder claimants are able to obtain a
card option, the DEO offered claimants
withdraws funds; and portion of their benefits in cash.
the option of receiving their funds via
the rate-of-return the Issuer earns. direct deposit or check. The DEO began Cardholders have a variety of
investigating the use of prepaid debit options for accessing the cash
Experiences with Prepaid cards for the Reemployment Assistance or they can use the card to make
purchases. The security offered
Debit Cards program and issued a Request for
by a card reduces the risk that a
Proposals in 2008. The DEO awarded
During our interviews, we inquired claimant’s cash will be lost or stolen.
10 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHThe Emergence of Prepaid Debit Cards
In addition, the cardholders are DEO officials said that taking a
provided protection in the event that phased-approach to implementation was
a card is lost or stolen. Cardholders helpful. When DEO implemented the pro- Since a state’s
who promptly report a lost card gram in 2010, it did not require existing contract with the
may receive a replacement card check recipients to opt for either direct Issuer governs how
containing the balance remaining deposit or a prepaid debit card. Instead,
costs are covered,
at the time the card went missing DEO allowed existing check recipients
as well as have any funds restored to either opt for electronic payment shifting revenue from
to their card due to unauthorized (direct deposit or a prepaid debit card) one party to another
transactions. The funds are or continue to receive a check. The state will have an impact
also Federal Deposit Insurance did not mandate that claimants opt for an
on other aspects of
Corporation (FDIC)-insured up to electronic payment until July 2012. DEO
the maximum dollar limit allowed officials thought the phased-approach to the contract.
by law and are fully compliant with exclusive electronic payment helped make
cardholder protections established their transition successful.
by the Federal Reserve Board under how costs are covered, shifting revenue
Florida’s DEO has developed a
Regulation E. from one party to another will have an
revenue-sharing arrangement with the
impact on other aspects of the contract.
Payments made by check have seen Issuer whereby the Issuer shares a por-
While a revenue-sharing arrangement
a marked decline since the prepaid debit tion of interest earnings with the state.
may be of limited benefit to a state
card program was launched in Florida Florida was the first state to request
because its administrative costs are
in 2010. The percentage of benefits paid such a revenue-sharing arrangement,
reimbursed by the federal government,
by check declined from six percent of and California is the only other state in
the arrangement could have an impact
Reemployment Assistance payments in our sample that had negotiated a similar
on costs incurred by the federal govern-
January 2012 to less than one percent of revenue-sharing arrangement. Since a
ment, cardholders or others.
payments in December 2012. state’s contract with the Issuer governs
Figure 4: States Offering Prepaid Debit Card Option for Unemployment
Insurance Benefits
WA
ME
MT ND
VT
OR MN
NH
ID SD WI NY MA
WY MI CT RI
IA PA NJ
NE
NV OH
IN DE
UT IL
WV MD
CA CO VA DC
KS MO KY
NC
TN
AZ OK
NM AR SC
MS AL GA
TX LA Prepaid Programs = 43
No Card Programs = 7
FL
AK
HI
Source: Alpha Group LLC. Data reflects public information available through individual state agency
websites and other publically available information through April 2013.
Government Prepaid Cards Lower Cost and Improve Access 11The Emergence of Prepaid Debit Cards
option. This figure grew to 44 percent, a compelling need for a paper check.
where it plateaued in 2002. DCS officials Currently, 85 percent of DCS’ child
The largest training partially attribute this growth stoppage support disbursements are handled
effort involved to custodial parents’ reluctance to share through prepaid debit cards or direct
educating cardholders information that might enable funds in deposit. When the prepaid debit card
their bank accounts to be garnished. program was launched in 2003, 37
on such topics as
DCS officials gave two primary percent of the disbursements were via
how to: avoid fees reasons for moving to a prepaid debit direct deposit; there is now an even split
when using ATMs; card program: cutting operational between direct deposit and prepaid
select and protect a costs and improving custodial parents’ debit cards.
PIN; receive cash back access to funds. Because Washington In 2012, DCS officials said they made
state saw a significant savings from the 232,000 disbursements to custodial
from retailers; and direct deposit program, DCS wanted parents via electronic payment (direct
obtain their balance. to increase the use of EBT to achieve deposit and prepaid debit cards). With
additional savings. Improving access half of these (116,000) disbursements
to the benefits was also a factor in their being made to prepaid debit cards, we
Training was also a consideration dur- decision. The prepaid debit card allows estimate the prepaid debit card program
ing implementation. Both cardholders and custodial parents access to their funds enabled DCS to avoid issuing approxi-
DEO staff had to be trained. The largest upon deposit by the state. mately 1.39 million checks a year.
training effort involved educating card- DCS considered using EBT, which Overall, DCS officials said they have
holders on such topics as how to: avoid had been successful for SNAP and other been very satisfied with the prepaid card
fees when using ATMs; select and protect programs. However, they determined program and it appears that other states
a PIN; receive cash back from retailers; that EBT was more apt to meet the are similarly satisfied. Nearly all (48) of the
and obtain their balance. This training was needs of a benefits program than for states and the District of Columbia have
primarily handled by the Issuer. Educating general payments like child support. implemented prepaid debit card programs
the DEO staff was also important, but did With EBT, access to cash payments is to make child support payments. Figure 5
not require as much effort. limited because it operates on a closed- illustrates the extremely high acceptance
Overall, DEO officials said they have loop network that works well for a rate in the child support arena.
been very satisfied with the prepaid specialized program like SNAP, but does
debit card program and as shown in not offer the same consumer protec-
tion or degree of access afforded by
Figure 4, nearly all (43) of the states and
commercial payment networks. While
DCS officials gave
the District of Columbia offer prepaid
debit cards as a payment device for DCS officials explored the possibility two primary reasons
unemployment insurance benefits. of implementing a prepaid debit card for moving to a
program, their bank approached them prepaid debit card
Washington State’s Division of about using a payroll card system that
Child Support had just been developed. Conversations
program: cutting
Washington State’s Division of Child between the state and its bank culmi- operational costs
Support (DCS) is tasked with receiving nated in 2001 with a pilot test of the and improving
child support funds from noncustodial prepaid debit card. The pilot lasted one custodial parents’
parents and distributing these funds to year and moved into operational mode
in 2003.
access to funds.
custodial parents. The state’s central-
ized payment mechanism for child DCS offered as an alternative the
support was established under the 1996 prepaid debit card to current check
federal welfare reform legislation. DCS recipients and made it the default option
had used electronic payments since for new enrollees. direct deposit was
1994, when they started providing a still an option, but the state automati-
supplemental, direct deposit, option cally makes the custodial parent’s first
to issuance checks. About 30 percent payment with a prepaid debit card.
of the state’s child support payments There is a limited check option for new
were made via direct deposit, once an enrollees who can prove that they have
12 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHThe Emergence of Prepaid Debit Cards
Figure 5: States Offering Prepaid Debit Card Option for Child Support Payments
WA
ME
MT ND
VT
OR MN
NH
ID SD WI NY MA
WY MI CT RI
IA PA NJ
NE
NV OH
IN DE
UT IL
WV MD
CA CO VA DC
KS MO KY
NC
TN
AZ OK
NM AR SC
MS AL GA
Prepaid Programs = 48
TX LA
No Card Programs = 2
FL
AK
HI
Source: Compiled by Alpha Group LLC. Data reflects public information available through individual
state agency websites and other publically available information through April 2013.
Oklahoma’s Tax Commission with the new state law. For the 2012 year, result, the State Treasurer’s Office sent
Oklahoma’s Tax Commission (Tax the Tax Commission issued 311,422 a second wave of announcements after
Commission) is responsible for the individual income tax refunds, totaling the tax refunds began to be issued. The
collection and administration of taxes, $82.7 million on prepaid debit cards. second announcements improved the
licenses and fees imposed by the The Tax Commission faced unique banks’ response to the cards.
state. In 2011, the legislature passed challenges in converting to prepaid debit Overall, Tax Commission officials
the ‘Transparency, Accountability cards because tax refunds are not made said they have been very satisfied
and Innovation in Oklahoma State on a recurring basis like child support with the prepaid debit card program.
Government 2.0 Act’, which required all and unemployment insurance. Because However, there are quite a large number
payments made by the State Treasury be tax refunds are issued once a year, the of states with income tax programs
disbursed electronically. Prior to enact- agency could not identify its cardholders that have not yet adopted prepaid debit
ment of this law, the Tax Commission until personal income tax returns were cards. As shown in Figure 6, nine states
gave individual taxpayers two options filed. Cardholder education had to be do not have a personal income tax; only
for receiving a tax refund: direct deposit conducted almost simultaneously with 10 of the 41 states with personal income
or check. With passage of the new state the issuance and receipt of their card. tax programs now offer prepaid debit
law, checks were eliminated as an option The State Treasurer’s Office began the cards as a refund payment option. The
for tax refunds to individuals. Because initial education process for banks by 10 states represent a 43 percent increase
not all individuals have a bank account, sending out an announcement about over the seven states that used prepaid
the Tax Commission looked to a prepaid the card program to all banks located cards in the prior year.
debit card system to supplement direct in the state. However, feedback from
deposit and fulfill the mandate to make the new cardholders indicated that the
electronic payments. The program notices might not have reached all of
was implemented in 2012 to handle the bank personnel servicing the public.
tax refunds for 2011. Tax Commission Some tellers were uncertain about
officials said the main reason they moved how to handle the prepaid debit cards
to a prepaid debit card was to comply presented for OTC withdrawals. As a
Government Prepaid Cards Lower Cost and Improve Access 13The Emergence of Prepaid Debit Cards
Figure 6: States Offering Prepaid Debit Card Option for Personal Income Tax Refunds
WA
ME
MT ND
VT
OR MN
NH
ID SD WI NY MA
WY MI CT RI
IA PA NJ
NE
NV OH
IN DE
UT IL
WV MD
CA CO VA DC
KS MO KY
NC
TN
AZ OK
NM AR SC
MS AL GA
LA
TX Prepaid Programs = 10
No Card Programs = 31
FL No State Tax = 9*
AK *Tennessee and New Hamp-
shire have state tax on dividend
and interest income only.
HI
Source: Compiled by Alpha Group LLC. Data reflects public information available through individual
state agency websites and other publically available information through April 2013.
Treasury’s Financial FMS saw the prepaid debit card as a bank or credit union account use
Management Service a way to create a low-cost ‘bank-on-a- direct deposit, the prepaid debit card
FMS led the federal government’s card’ that allowed access to benefits allowed Treasury to further expand its
effort to reduce the number of checks at little-to-no cost to the recipient, and use of electronic payments. Treasury
issued to individuals; offering a direct at low-cost to the Treasury. A pilot expanded its prepaid debit card program
deposit option to Social Security recipi- program was conducted in the State into other agencies that pay monthly
ents since 1976. Its efforts to increase of Illinois for SS and SSI recipients. In benefits, including the U.S. Department
the number of people who receive 2007, the pilot led to a selection process of Veteran Affairs, the U.S. Department
payments via direct deposit had been whereby a nationwide prepaid debit card of Labor and the U.S. Coast Guard.
stymied by the challenges associated issuer was selected. FMS’s prepaid debit FMS officials are satisfied with
with serving the unbanked population. card is called the ‘Direct Express’ card. the prepaid debit card as a way to
In 1996, Congress passed the ‘Debt With a ‘no or low’ cost option in place pay benefits to unbanked individuals.
Collection Improvement Act’ that for transferring benefits , FMS is work- They also stated that their cardholders
sought to further the move to electronic ing with the federal agencies it serves appear to be satisfied as measured by
payments by requiring Treasury to work to eliminate checks through the use of their cardholder survey. On an annual
with banks and credit unions to create prepaid debit cards. Instead of requir- basis, a random sample of 1,200 ‘Direct
a low-cost bank account. It was thought ing all check recipients to immediately Express’ cardholders are surveyed by
that this new type of low-cost account convert to prepaid debit cards, FMS an independent firm regarding their
would facilitate the move to direct and the Social Security Administration experiences and satisfaction with the
deposit. The effort, however, proved (SSA) opted to offer the ‘Direct Express’ ‘Direct Express’ card. Each year, card-
unsuccessful because there was little prepaid debit card as an option to exist- holder satisfaction rate based on survey
incentive for banks and credit unions ing check recipients and new applicants. recipients is 95 percent.
to offer these low-cost bank accounts. The result has been a gradual increase
In 2005, FMS began looking at the in the number of electronic payments
prepaid debit card as a way to meet the and a reduction in the number of checks
requirements of the ‘Debt Collection issued by FMS. Although it is Treasury’s
Improvement Act’. policy and preference that anyone with
14 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHUnderstanding the Move
to Prepaid Debit Cards
Most of the people we interviewed for a number of reasons. They seldom, cash after cashing a check;
for our research were directly involved if ever, adopted the card programs for Access — The unbanked have greater
with their agency’s conversion from only one reason. When we asked, “What options for accessing their funds; and
checks to prepaid debit cards. We used factors led your agency to move to a Speed — Cardholders, especially
a standard list of open-ended questions prepaid debit card system?” they most custodial parents receiving child
to facilitate our discussion and to ensure frequently offered the following reasons: support payments, have faster
uniformity in our interviews. The ques- Cost — The government’s cost for access to their funds.
tions were developed by AGA research- operating a prepaid debit card is less Figure 7 contains information on
ers and provided to the interviewee in than the process of mailing checks the program that has implemented a
advance. All of the officials interviewed and clients are able to access their prepaid debit card in each state that we
were designated by their agency head to payments without paying fees; interviewed, and lists their top three
participate in our interviews. Security — Checks do not have to be reasons for converting to cards.
Our interviews revealed that govern- mailed to unsecured mail boxes and
ments moved to prepaid debit cards clients do not have to safeguard their
Figure 7: Primary Factors for Moving to Prepaid Debit Cards
State or Program Factor Factor Factor
Federal Number 1 Number 2 Number 3
Illinois Unemployment Cost N/A N/A
Florida Unemployment Other Access Security
California Unemployment Speed Access Security
Nebraska Unemployment Cost Speed Security
Washington Child Support Cost Access N/A
California Child Support Cost Security Speed
West Virginia Child Support Cost Security Access
North Dakota Child Support Cost Security Access
Oklahoma Tax Refunds Other Cost N/A
Federal Direct Express Cost N/A N/A
Note: California child support officials ranked the three factors of equal importance.
Cost was the primary reason that Seven of the 10 government agencies it is not surprising that for the majority,
governments moved to prepaid debit interviewed, stated cost was a reason cost was the primary reason for moving
cards, followed by a desire to increase for moving to prepaid debit cards. Given to prepaid debit cards.
security and improve access for individ- that governments are seeking to reduce
uals who receive government payments. costs while maintaining service levels,
Government Prepaid Cards Lower Cost and Improve Access 15Understanding the Move to Prepaid Debit Cards
Cost: the Primary Driver Access: Also a Motivator cardholders can use the prepaid debit
card to shop and pay bills online and
We asked agencies whether they Our interviews revealed access was by phone.
saved money by moving to prepaid a significant motivator in the move to
debit cards and, if so, how much was Prepaid debit cards also allow
prepaid debit cards. Many state officials
saved. Some agencies provided only a cardholders timely access to their funds.
saw offering prepaid debit cards as a
fixed-dollar estimate of their savings. Timeliness is particularly important
way to increase the options available
Other estimates were dated or did not in the Child Support Enforcement
to the unbanked and underbanked in
include all factors needed to accurately program where the federal government
accessing their funds, and to do so in
calculate cost-savings. For example, requires that custodial parents have
a cost-effective manner. For example,
some agencies only based cost-savings access to their funds within two days
officials of Department of Economic
on postage, and did not include other of the government receiving payment
factors like labor, envelopes and check Opportunity, which handles Florida’s
from a non-custodial parent. Officials
stock. FMS provided the most detailed reemployment assistance program,
in Washington State’s DCS indicated
estimate of cost-savings. On a per-check sought to improve access to benefits in
that their prepaid debit card program
basis, FMS estimates that it cost $1.05 rural areas –due to inadequate banking
provides the custodial parent with
to issue a check and $0.09 to issue an services. They said that access to bank-
access to funds the same day deposited
ACH payment, equating to a savings of ing services was often limited in rural
on the card. With checks, the custodial
$ 0.96 per check. The prepaid debit card areas and that prepaid debit cards would
parent had to wait for the check to arrive
program has produced significant cost allow access to cash while avoiding
savings for FMS and a marked reduc- via mail, often delaying access to their
check cashing fees for the unbanked
tion in the number of checks it issues. funds for two or three days. Officials
and underbanked. And, even though
Treasury officials provided information in the West Virginia Bureau of Child
the benefit approval and payment cycle
which showed that in February 2013, Support said that they receive few, if
is the same, cardholders typically have
the monthly check volume dropped any, complaints about the custodial
same-day access to their funds once
to 3.5 million checks from a monthly parents’ access to funds since moving
they activate their card. Next-day avail-
volume of 11.0 million in January 2011. to the prepaid debit card program.
ability is an improvement over waiting
According to an Office of Legislative
and Public Affairs press release issued for a check to arrive in the mail during
in December 2010, FMS is projected to repeated payment cycles. Security: Safeguarding
save an estimated $1.0 billion over the California’s Economic Development Payment Recipients and
next 10 years by moving SS, SSI and Department, which handles their Cash
other paper check payments to prepaid unemployment compensation, disability
Prepaid debit cards also improve
cards. Treasury’s estimate not only insurance and family leave payments,
security for payment recipients in a
included savings in check printing and cited improving access to benefits as
postage costs, but also included future number of ways:
the second most significant factor in
costs related to improving and maintain- While a prepaid debit card is initially
its decision to move to a prepaid debit
ing the check printing infrastructure that mailed to payment recipients,
card program. They wanted to design a
are subsequently avoided. they avoid the risk associated with
program that would allow the unbanked
California’s Economic Development repeated delivery of checks to
to access their benefits without
Department officials reported a cost sav- mailboxes, where they could be stolen;
incurring fees.
ings of $4.0 million each year in postage Recipients need not carry their entire
costs. They were also able to reassign Thus far, the government-issued
payment in cash after cashing a
12 employees previously involved in prepaid debit cards have been branded,
check. Instead, they can withdraw
printing, issuing and accounting for Visa or MasterCard; and participants
all or partial funds at an ATM and
checks, to new duties once the prepaid (including banks, merchants and other
use the card to make PIN-protected
debit card program was implemented. service providers) have agreed to abide
California did not include the cost of the purchases or receive cash back from
by each network’s respective operat-
12 staff in its cost-savings projections. merchants; and
ing rules. By giving clients access to
Oklahoma’s Tax Commission, ATMs and merchants that accept Visa If a card is lost or stolen, a new card
which began using prepaid debit cards or MasterCard prepaid cards, govern- can be issued and the funds restored
instead of refund checks for individual ments greatly expand the ability of their in the same manner used for other
income tax refunds, saved an estimated debit card products.
unbanked or underbanked payment
$500,000 in 2012 by using prepaid debit
recipients’ access to cash. Additionally, Nebraska unemployment compensa-
cards in lieu of checks.
tion officials said program security has
16 AGA CORPORATE PARTNER ADVISORY GROUP RESEARCHYou can also read
