Prepaid cards – a solution for the financially excluded?
The National Prepaid Cards Network
Colin Whitehouse
Independent Govt. Advisor
Chair – National Prepaid Cards Network
colin.whitehouse@sulion.co.uk
National Prepaid Cards Network
Created in May 2011
Independent group, supported by MasterCard
Network meetings and events held across the country
Over 100 organisations involved, together with supply partners
Assesses sector requirements and captures best practice
Shares best practice, issues and problems for mutual benefit
Suppliers are able to better shape their products to meet true
market needs
• Current focus is on Council services, Universal Credit and NHS
Personal Health Budgets
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How do prepaid cards help to transform services?
- because they address all four principles of successful service
redesign
Understanding
the needs of
customers,
what works
well for them
and what they
don’t like
Understanding
the
perspective of
the people
who deliver
the service
from day to
day
Understanding the
performance of
the process of
delivery by
measuring how
well it delivers
what customers
want
Identifying the
causes of
wasteful work
that is done e.g.
trying to correct
‘failures’ in
effective service
delivery & reduce
unnecessary
customer strain
Prepaid cards are proven to improve the lives of customers, increase staff
morale, reduce costs and eliminate errors
- Helping to spend more budget on service delivery and reducing unnecessary costs
What are Prepaid Cards and how do they
work?
• Funds are uploaded onto card by Council, funding
organisation and/or service user
• Cards can be then used in a similar way to credit/debit
card, but:
• ATM/cash back use is often blocked
• Spend can be restricted by merchant or by category
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Balance cannot fall below zero
Direct Debits and Standing Order facilities
Service Users can monitor transactions and balances online
Telephone support can be provided by card supplier
Councils sometimes have access to transaction level details
Main business benefits
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Replaces cash handling - safer and more secure
Good management information (the no.1 benefit)
Makes more effective use of staff time
Supports personalisation and commissioning agendas
Monitored spend leads to better outcomes
Easy to track client contributions
Possible income generation opportunities
No major IT investment required
Main service user benefits
• Prepaid cards are generally available to all, regardless of
financial circumstance
• many potential benefits for those financially excluded
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No need to carry and manage cash
Promotion of life skills / social inclusion
Access to better services and lower online prices
Quicker access to funds
Easy monitoring and management of balances
Funds cannot be ‘lost’ by disappearing into an overdraft
What people say
• “Prepaid’s so much better for me, I don’t have to worry about
it at all. I used to get real anxiety attacks, I couldn’t deal with
the paperwork.”
• “for us it’s been a plus, ‘cause to manage it for my dad, I can
show him statements show him how everything’s paid”
• “you can chose your own support. If don’t like the agency you
can move or find someone privately”
• “If I have any problems I always phone LBM [Merton Council].
They’re brilliant.”
Using prepaid cards to aid financial inclusion
• Cards generally available to all
• Ability to track spending and manage financial affairs
• Can be advised by email or text when a payment has been
received onto the prepaid card
• Automated payments to aid budgeting and financial
management
• Payments to different family members can be combined onto
one card to ease budgeting
• Freedom of choice, better access to online services and goods
• Improves safeguarding and reduces the potential abuse of
funds
• No credit line, and funds received don’t disappear into existing
overdrafts
Typical categories of use
• Direct payments
• Adult social care, disability allowances, young people leaving
care
• Budget management and monitoring
• Petty cash replacement, travel expenses, vouchers
• Instant issue
• Cards can be loaded instantly 24/7
• Children’s services, asylum seekers, staff payments
• Councils can carry a stock of cards for emergency use
Typical business uses
• Solving service user based problems
• Unbanked service users - replaces cash
• And unbanked users can pay 8% to cash cheques
• Monitoring appropriate spend of funds
• Easy reporting of transactional use, automatic triggering of reports
• Replaces the chasing and processing of paper bank statements
• Taking back funds when necessary
• Funds can remain property of the issuing Council until spent
• Better information allows effective service/demand planning
• As an employer
• Payments to temporary or agency staff, assistance/relocation
payments
• Travel and other expenses, Elected Member expenses become
instantly transparent
• Replacing petty cash in catering, housing repair etc.
Case study: Personal budgets
Lancashire County Council
£2m savings from £40m direct payments budget
Use of prepaid cards is mandated for all new recipients*
Plan to have all 3,000 direct payments recipients using prepaid
Effective use of small teams, reduces need for additional staff
Risk management based use of information should halve the need for
visits
• Typical usage:
• Cards loaded by BACS transfer as an alternative to a holding account
• Service users load funds by SO or transfer, by phone or internet
• Cards can be used by nominated carer / assistant / social worker
• Recurring payments can be made by DD/SO
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Case study: other examples from the Network
• Directed activities for young people
• Service user payment to day care and supported
employment providers
• Personal expenses for clients in residential accommodation
/ in receipt Court of Protection orders
• Replacing handling of cash for:
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Young people leaving care
Asylum Seekers – Looked After Children
Emergency payments
One NW Council estimates savings of 4 FTE’s simply by not
handling cash
Some frequently asked questions - 1
• Ownership of the funds is determined by the Council and
affects the configuration of the scheme
• If a client dies then a predetermined process is designed to
handle repayments
• Money laundering regulations are satisfied by Council
based identity verification
• Cards issue may be prevented by:
• Age
• Inability of client to pass ‘Know Your Client’ checks
• Being on either a sanctions or politically exposed persons list
Some frequently asked questions - 2
• Usage can be restricted by enabling or blocking Merchant
Category Codes and/or ATM use during setup phase
• Use of active cards can be instantly blocked if necessary
• Prepaid cards can be used a smart cards for a range of
services
• costs are currently quite high but expected to fall significantly
• Typical transaction detail:
• Time of transaction
• Merchant description
• Value
• Prepaid card data can be integrated into existing financial
systems in a number of ways (some very simple)
Prepaid Cards - guidance resource
• Specification based on what Councils said they need, or
would have liked to have known before they started
• Content based entirely on the experiences of Councils who
have implemented schemes or are in the process of doing
so
• Programme Managers contributed their experiences of
implementation and practical issues
• Advanced Payment Solutions (APS), Prepaid Financial Services
(PFS) and others
• Network members provided documentation to create a
supporting online resource
Contents of the guidance document
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What are Prepaid cards and how do they work?
What typical business benefits can they deliver?
How would our clients benefit?
How much do they cost to operate?
Where might they be used?
Case Studies
In which other service could they be used?
How do I create the outline business case?
How do I arrive at my current costs?
FAQs
Examples from the online resource
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Guide to the use of Prepaid cards for service users
Cardholder agreements
Council / Direct Payments agreement
Prepaid cards business case
Options appraisal report
Project Initiation Document
Tender specification
Marketing brochures
Sample Invitation to Tender
Sample Pre Qualification Questions
…………. and more
Looking at new uses via Special Interest Groups
• Universal Credit
• Potential to use prepaid cards for a proportion of UC recipients
to enable them to receive funding electronically and better
manage their finances
• Developments may include multiple ‘wallets’ on a single card
• Currently being trialled by housing associations and credit
unions
• Personal Health Budgets (PHBs)
• All recipients of continuing healthcare have the right to a PHB
by April 2014
• Potentially £2.5bn available by PHB’s by April 2015
• Clinical Commissioning Groups have no experience of handling
direct payments
• Potential for Councils to deliver the service on behalf of CCG’s
Prepaid cards - Improve service : Reduce cost
“Prepaid cards are a great way to get things done, they’re easy to
use and safer and more secure than cash”
– London Borough
“Prepaid cards allow us to focus on monitoring high-value
processes, they allow all Council departments to manage more
effectively”
– London Borough
“I’ve been able to take responsibility for my entire budget by using
the Prepaid card for activities and equipment”
– County Council Care Leaver
Questions?
Discussion Session
• Do you have any experiences of Prepaid cards?
• Which problems faced by the financially excluded might be
solved by their use of prepaid cards?
• What are the biggest problems which might slow down the
introduction of prepaid cards?
• What can the network and/or suppliers do to help?
• Are there any prerequisites (support/services) that first
need to be put in place?