By following in the footsteps of international markets and embracing prepaid solutions, delivery of government relief can be quick, secure and efficient for all Canadians
In the United States, the government’s aid package includes the delivery of cash payments not just through the customary cheques and direct deposits, but via prepaid cards too, with the U.S. Treasury recently announcing that 4 million Economic Impact Payments (EIP) via prepaid cards issued by MetaBank. In the UK, prepaid solutions are already used extensively by many local authorities to disburse welfare and other benefits and UK charities and non-governmental organizations turn to prepaid solutions to help support those most in need. So, amidst the pandemic, UK-based allpay established a prepaid card program specifically designed to help UK authorities get funds to individuals experiencing hardship as quickly as possible.
The use of electronic vouchers, or electronic gift cards has even reached the EU’s political agenda in the context of considering effective payment methods for vulnerable and at-risk individuals. The use of gift cards in Germany, for example, has now come into focus with parliament debating the use of gift cards to reimburse customers for cancelled events and in Italy, Milan chose Soldo’s prepaid card to distribute its portion of the Italian government’s €400m solidarity fund.
Meanwhile in Canada, despite the government’s impressive speed and diligence in establishing the Emergency Response Benefit (CERB), relief delivery has only taken the form of paper cheques and direct deposits—even though an estimated three per cent of Canadians (close to one million) are unbanked and around 15 per cent (close to five million) are underbanked. Using these customary methods of relief delivery leaves Canada’s most vulnerable segments of society at risk of delay in receiving needed relief funds, difficulty in safely converting a cheque to cash, or being entirely left out of the aid program.
Not only do prepaid solutions provide speed, accountability and efficiency, but they also help guide how financial aid is spent. Unlike cash, prepaid products can be time bound and programmed for use at selected merchant categories, such as grocery, childcare and transit. They also eliminate the need to send follow up cheques in the event of supplementary relief disbursements. Additional funds can simply be reloaded onto the cards electronically.
What’s most relevant in today’s environment is that the prepaid cardholder does not have to wait for support payments to be mailed or deposited. The cards arrive pre-loaded with funds and can be used immediately, just like any debit or credit card, by presenting them at point of sale—whether curbside, in-store, or online—at no cost. With a touch-free payment option, users can feel comfortable spending money contact-free. There is no cost for consumers to receive or use these cards, unlike cashing a cheque.
Prepaid continues to demonstrate its value in various markets at a time when millions of people need fast and secure access to emergency funds and when authorities, charities and others need an efficient means to disburse these payments. In Canada, it is imperative that we ramp up our embrace of prepaid. Our $4.3-billion prepaid industry includes an extensive value chain including the networks, big banks, challenger banks and program managers. Working closely with governments, the prepaid industry can quickly, securely and efficiently plug the gap for Canadians who cannot be reached by direct deposit.
