Paying benefits card options

Interesting article in the Economist about using pre-paid debit cards to distribute benefits in developing and developed countries (“A plastic prop: Schemes to distribute aid and benefits”).

In Pakistan, pre-paid debit cards were loaded with $300 per month that could be spent in 500 terminals for food and medicine.

In the Dominican Republic, 800,000 people use this type of Visa card to get food aid, fuel subsidies, and rewards.

38 American states distribute benefits on such cards.

In Northern Ireland, there was a switch in 2003 to have benefits paid directly into recipient’s bank accounts or via a Post Office Card Account.

I’ve patiently stood in post office queues behind those entering their card pins and receiving their state benefits in cash.

So, this begs the question, why not make the payment benefit system more open and move towards a pre-paid debit card system?

For recipients, this would mean not having to queue up at the post office (any ATM/hole-in-the wall would do). You wouldn’t even need to hold a bank account anywhere. From a security perspective, the balance on the card is safe even if the card is lost. Fraud can be countered by including biometric information on the card (as they do in the Pakistan scheme). Meanwhile, card networks and banks take a small slice of every transaction.

What do you think about this?

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