The Power of Prepaid
A great untold story in public policy is the quiet proliferation of prepaid cards – a similar technology to a debit card except pre-loaded with funds – across public services. The cards are increasingly used by local authorities – 25 per cent currently use them and another 30 per cent plan to do so in the next year – to make a range of funding transfers to residents, including personal budgets for social care.
The current schemes are not without teething problems, and lessons from the first wave of these cards need to be learnt, but their potential is substantial: they offer a range of benefits to local authorities and service users, including significant back office savings for councils, and a much simpler means for users to demonstrate that their spending aligns with their agreed care package.
However, The Power of Prepaid argues that the potential for the technology extends beyond direct payments. The Government’s flagship welfare reform, the introduction of Universal Credit, is beset with difficulties, not least how to provide it to those without bank accounts – the ‘unbanked’. The report suggests that by issuing the Universal Credit on a prepaid card, the Government could alleviate the risks and premiums associated with a pure cash economy, while at the same time promoting financial inclusion and savings culture.
Further, it opens up the potential – recently controversially debated in Parliament – to exercise some control over how benefits are spent. Whatever the future of prepaid cards, it’s clear that they enable more creative and innovative thinking regarding how people relate to local and national government and public services, and so deserve wider public debate.