Gov't prepaid prescribed for financial health

The Center for Financial Services Innovation and public policy think tank Hudson Institute Inc. released a joint survey that said government benefit payments loaded onto prepaid cards can improve the overall financial well-being of benefit recipients. The study also said prepaid cards and other alternative financial instruments provide a glimpse into the future of benefit disbursements.

The report, Double Duty: Payments Cards as a Doorway to Greater Financial Health, said that electronic payments not only help government benefit recipients improve financial health and capability, but can transition recipients to use better quality and more effective financial services.

"Electronic payments 1.0 is a success story," said Rachel Schneider, Senior Vice President, Insights and Analytics, at CFSI, and coauthor of the report. "The move to electronic benefits saves governments the cost of writing and distributing checks; for consumers, their funds are delivered more quickly, safely, and reliably. But electronic payment methods can do more – and defining 'more' will be the next chapter in the story."

The study noted that prepaid cards, like the MasterCard Worldwide-branded general-purpose reloadable prepaid card used in the U.S. Department of the Treasury's Direct Express program for the electronic disbursement of Social Security and other federal benefits, can help the approximately 17 million unbanked adults in the United States (or about 8.2 percent of the population) receive payments.

Indeed, the researchers believe prepaid cards and other alternative financial products are the vehicles that will lead to the future of benefit payments. "The relationship of technology and financial inclusion will shape the potential of government payment cards and other tools that look different from traditional bank accounts," the report concluded. "This is the next generation of payment cards and financial inclusion products."

The report can be accessed at www.cfsinnovation.com/content/double-duty-payments-cards-doorway-greater-financial-health .

Editorial Note:

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