Government benefit programs go prepaid

MasterCard Worldwide noted a global shift is occurring where governments are moving toward disbursing funds to citizens via prepaid cards. Most recently, the South African Social Security Agency distributed over 2.5 million prepaid debit cards to the nation's benefit recipients, with plans to release 10 million cards by March 2013, MasterCard reported.

In the United States, the U.S. Department of the Treasury is phasing out check payments of Social Security and other federal benefits; it's goal is to be entirely electronic by March 2013, potentially saving the government $1 billion over the next decade. The card brand said three million MasterCard-branded Direct Express prepaid debit cards have already been issued to U.S. benefits recipients.

According to MasterCard, approximately 2.5 billion people worldwide lack access to financial services. "By supporting governments around the world with electronic payment programs we are helping save money and improve efficiencies, but more importantly, together we are opening up a world of inclusion for those who have previously not had access to traditional financial services," said Tim Murphy, Chief Products Officer at MasterCard.

The card brand cited several developments globally:

• Italy launched a social card program via post offices that is targeting 1 million benefit recipients.
• Romania began issuing prepaid cards to social benefit recipients through national post offices.
• Toronto Employment and Social Services launched Europay/MasterCard/Visa chip and PIN prepaid benefit cards.
• United Arab Emirates' Ministry of Labor began issuing contractor wage payments on prepaid cards.

MasterCard also said governments in a number of other nations are beginning to support initiatives that embrace the financially underserved, including a pilot program in Mexico where residents of Oaxaca can access financial instruments using text messages on mobile phones.

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