Prepaid cards – a solution for the financially excluded? The National Prepaid Cards Network Colin Whitehouse Independent Govt. Advisor Chair – National Prepaid Cards Network [email protected] 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 • • • • • • • 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 • • • • • 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 • • • • • • • • 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 • • • • • • 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 • • • • • • 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: • • • • 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 • • • • • • • • • • 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 • • • • • • • • • • • 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?