From cost-efficiency to integration

Within public sector organisations, there is increased demands for greater efficiency in financial processing, cost control and payment monitoring within these new budget conditions and for the efficiency to be more comprehensive than ever. As a tool that enables the public sector to achieve this, the prepaid card industry will benefit in the long-term from the new government changes.
    
Key points
The public sector has huge potential that is still being realised, so it’s an interesting and exciting time to be part of the evolving market. When looking at how prepaid cards as a payment solution can be used in the public sector, cost, efficiency, control, social integration and image are key points that contribute to it reaching its true potential.
    
Cost is an obvious consideration. As a mechanism for any public spending, prepaid cards offer a cost-effective resource that boasts the same legal framework as a bank account. It could therefore be the ideal tool to enable cash flow within and around both the physical and virtual world.
    
With little outlay cost per card and the ability to load and re-load funds onto them electronically, the costs – both financial and resource-wise – can be minimal when compared with cheques and direct deposits. Prepaid cards also offer a much safer and more secure alternative to cash.

Efficiency & control
Efficiency in the public sector is a huge consideration, especially when dealing with social welfare, public benefits and renumeration. Cheques, cash and direct deposits have traditionally been the ways in which the public sector has provided finance to its employees, suppliers and citizens. These haven’t always proven to be the most efficient payment methods due to fund-clearing time periods, bank locations etc.
    
Prepaid cards can therefore offer a way for all – end-users, policymakers and processors – to have immediate access to money, and monitor the transactions made.
    
This takes us to the notion of control. There are two elements to consider when it comes to control and the potential of prepaid cards in the public sector.
    
The first is control in the overall prepaid application where relevant authorities – for instance public sector finance and payroll managers – can have direct power over how much money is loaded onto a card. This is quite an obvious control element and one that comes with prepaid applications in both the public and private sector, and B2B and B2C realms.
    
The second element is that prepaid cards provide more efficiency, and in turn more control than cash, as to where allocated money is being used. This is a key benefit for the public sector when dealing with social security payments such as unemployment benefits and state pensions as it gives an additional element of transaction monitoring. Prepaid cards could be the tool that solves the public sector’s concerns about where public money is being spent.

Social integration
People who exclusively use cash are missing many of the potential purchasing opportunities that are available to those you use credit, debit and prepaid cards. Cash limits people to the physical world, whereas card payments open doors to the online world. The beauty of a prepaid card is that it enables users to engage in both the physical and virtual world without the need to be linked to bank accounts and credit checks. If those whose lives are “cash-only” used prepaid cards, they could be more socially integrated with the rest of society.
    
Integrating prepaid cards into people’s everyday lifestyles is a current challenge the industry is facing. Whilst being used in fringe applications such as business travel expense management, remittance and temporary staff payment, the world of prepayment is now leaving its teen years and entering its adult age. The use of prepay is increasing in several diverse segments, including the public sector, which will contribute to widespread social integration.
    
It’s difficult to say when prepaid cards may be part of everyday financial life, however, if governments were to adopt the financial tool as a payment method, wide-scale acceptance would develop much sooner. With cheques expected to be obsolete by 2018 and the promise of a cashless society sometime over the next half-century, the sooner prepaid cards become an integrated financial tool within society, the better.
Today, we live in a physical and somewhat virtual world. Soon enough it will be a virtual and somewhat physical world and prepaid is going to have a sizeable role within that.
    
Governments need to appear to be at the forefront of societal developments and to be forward-thinking in its approaches to almost everything, and payment methods aren’t something that can be over-looked. The public sector should therefore be introducing prepaid cards not only for practical reasons, but also to convey the image of being on the ball and prepared for the future.
    
People within all sectors as well as the public and private spheres need to learn more about prepayment and how it can work for them. There are many question marks floating around at the moment but the true challenge lies in bridging the gap between concepts and reality, and this depends somewhat on end-user knowledge and awareness.

Encourage Behavioural Change

Irwell Valley, not unlike other Registered Social Landlords, was experiencing problems with low payment levels of rent. 70 per cent of Irwell Valley tenants were classified as poor payers with the sums of money and cost to the Association substantial.
    
In 1998 Irwell Valley became the first housing association to introduce a rewards and incentives scheme for its customers, Gold Service. The Association worked in partnership with the incentive and motivation division at Edenred, PrePay Solutions’ parent company, and still continues to do so today.
    
Irwell Valley uses the Gold Service programme to encourage residents to pay their rent on time and abide by the terms of their tenancy agreement. For each week they do this, the association recognises their loyalty by giving them a Gold Service point worth £1. These are accumulated over the period of 12 months and the equivalent amount in cash-back is paid to members through their personalised Gold Service membership prepaid card. Members’ points are credited to their Compliments Card at the end of November each year, after which members are able to spend the equivalent value at retailers participating in the Compliments Card scheme.

For more information
Web: www.prepaysolutions.com