CFSI Report Outlines ‘Next Chapter’ in Govt. Benefit Programs (April 1, 2013)
Prepaid cards represent “the next chapter” of electronic government payments, according to a new report from the Center for Financial Services Innovation (CFSI) and the Hudson Institute, which outlines ways to make benefit disbursement cards even more beneficial to recipients. One approach to improving benefit cards is by increasing the choice of card products available to a recipient, according to the report. Instead of selecting a single winning bidder for a prepaid card contract, the report suggests governments could specify a set of required features and permit multiple providers to build products that meet or exceed those specifications. The array of choices would enable customers to choose products that are best-suited for their particular needs and benefit from competition among card providers. The report also recommends expanding the functionality of prepaid benefits cards to include reloads from multiple sources, portability, funds transfers and savings purses to turn the cards into fuller-featured financial accounts and offer unbanked consumers the shortest path to becoming banked.
As prepaid benefit cards further penetrate the government benefits market, thanks in part to a Treasury requirement that went into effect March 1, mandating electronic payments of federal benefits disbursements, the paper articulates next steps for federal programs, state programs and industry as well as roles for nonprofits, academics and consumer advocates.