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Monday, August 31, 2015

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Update Newsletter: Summer 2005

Prepaid Applications in Government Benefit Payments

Prepaid cards and other electronic payment innovations have found a particular niche in facilitating government payments and benefits. As of June 22, 2004, the U.S. Department of Agriculture announced that all federal food stamp payments had been successfully converted from paper scrip to plastic cards. The payment technology used to implement this sea change in the distribution of food stamps is known as electronic benefits transfer, or EBT. Many of the beneficiaries of these programs fall into the category of unbanked or underbanked consumers. Some people have argued that these consumers’ growing familiarity with electronic payments may be helping to spur the adoption of prepaid and other card-based programs designed for and marketed to the underbanked.

In an effort to examine these developments and better understand emerging payment applications, the Payment Cards Center collaborated with the Bank’s Community Development Studies and Education Department and the EBT Industry Council to host a day-and-a-half-long conference on the subject. In addition to the EBT food stamp programs, conference participants devoted attention to several emerging applications. This next generation of EBT, dubbed “Tier II,” will incorporate technologies associated with PIN debit, smart cards, and prepaid cards to facilitate a variety of new EBT benefits payments. Among the programs discussed were Temporary Assistance to Needy Families, child-care assistance, child-support payments, and the Women, Infants, and Children (WIC) program; each of these programs has its own set of implementation challenges.

Highlights from these discussions can be found as a conference summary, Assessing the Impact of Electronic Benefits Transfer on America’s Communities and the U.S. Payment System. PDF