Increasingly, federal and state agencies view prepaid cards as a convenient and cost-effective alternative for the issuance and distribution of benefits payments. This fall, Florida's Agency for Workforce Innovation will implement a prepaid debit card program for unemployment benefit recipients.
The program, managed by Affiliated Computer Services Inc., is designed to give recipients another way to receive unemployment compensation. Currently, Florida residents have two options for receiving unemployment benefits: state warrant (paper check) and electronic funds transfer (EFT). The prepaid debit card will become the third option. "They'll have all three choices," said Robby Cunningham, Communications Director at the AWI. "Some states have gone mandatory but Florida has not."
The prepaid benefits card will be an open-loop, Visa Inc.-branded card that can be used at 1,800 surcharge-free, "in-network" ATMs statewide, including Wachovia/Wells Fargo's and Elan Financial Services' MoneyPass ATMs. According to Cunningham, 619,083 Florida residents have a "continuing claim status" with the state (people either receiving or certified to receive unemployment benefits). Fifty-nine percent of them receive benefits via EFT; 41 percent receive paper warrants, he added.
Cunningham believes prepaid debit cards will be in some ways an improvement over EFT. "The money will be deposited more quickly onto the debit card account than an EFT account," he said. "They'll have funds immediately. They'll be able to take the card and walk into a grocery store, for example, and use it much like any other debit card."
A primary market for prepaid cards is unbanked individuals who do not have access to bank accounts. Therefore, unbanked Florida residents cannot use EFT, which allows funds to be electronically wired into bank accounts. The prepaid benefits cards will thus give unbanked recipients an electronic alternative to state-issued paper checks.
The Federal Deposit Insurance Corp.'s 2009 Survey of Banks' Efforts to Serve the Unbanked and Underbanked found that 527,000 households in Florida are considered unbanked, which represents 7 percent of the total number of households in Florida. The largest unbanked minorities in Florida are African-American (24.2 percent) and Hispanic (8 percent), according to the FDIC. The AWI has taken that fact into account with the prepaid debit card program, with Xerox-owned ACS providing marketing materials and program access in Spanish and Creole, as well as English, Cunningham said.
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