The Green Sheet Online Edition
February 08, 2010 • Issue 10:02:01
Making the case for disaster relief cards
The 7.0 magnitude earthquake that struck Haiti on Jan. 12, 2010, has brought untold death and destruction to the island nation. According to J.P. Morgan, the treasury arm of JPMorgan Chase & Co., disaster relief cards for the Haitian people would be of no use at the present time, but may play a role sometime in the future.
"Ground usage in Haiti of any card-based products, disaster or otherwise, isn't imminent," said Chris Paton, Managing Director of J.P. Morgan's Public Sector Benefit Payments Business. "Card programs require strong, stable telecommunications networks, which we suspect are not in place right now.
"Down the road, when telecommunications networks are working again in some shape or form, the advantages of card-based aid delivery can be leveraged, but only to an extent as the number of merchants accepting card payments is quite limited."
Paton added that Haiti is one of the poorest countries in the world. He cited MasterCard Worldwide statistics that said only 3,000 merchants offer card payment capabilities to the Haitian population, which The World Bank puts at 9.7 million citizens. In comparison, MasterCard's global merchant base is 28 million, Paton said.
A disaster with scale
The U.S. corollary to the Haitian tragedy was Hurricane Katrina of 2005, which was the costliest and among the deadliest hurricanes in U.S. history. According to a case study presented at the 2006 Prepaid Card Expo, Katrina was a turning point in the use of electronic payments for disaster relief.
In American Red Cross Prepaid Cards as the life raft for victims of Katrina, Michael Brackney, Director of Service Delivery Development at the Red Cross, and W. Gregory Kerwick, Managing Director at JPMorgan Chase, said a paper-based voucher system had been in place since 1917.
It wasn't until the humanitarian crisis arose in the aftermath of Katrina that prepaid cards became the "primary financial assistance vehicle." Even in comparison to Hurricanes Andrew (1992), Isabel (2003) and Wilma (2005), Katrina was a "catastrophic event" that stretched the capabilities of the Red Cross, the presenters said.
For example, in the wake of Andrew, the Red Cross had to shelter about 50,000 individuals. But combining the populations that required housing due to Katrina and Hurricane Rita (which followed Katrina in September 2005), the number approached 500,000. Similarly, the Red Cross doled out over 5 million meals and snacks to individuals for Andrew; over 45 million for Katrina and Rita.
A card with scale
But the most striking statistic may be the one the presenters cited for individual assistance cases. For Andrew, the Red Cross helped less than 200,000 hurricane victims with personal assistance; for Katrina and Rita, that number was over 1.4 million.
Therefore, when catastrophic events occur, JPMorgan's electronic disaster relief program enables the Red Cross to scale its response to deliver the appropriate amount of financial aid to potentially millions of victims.
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