Government-issued prepaid cards provide agencies with an efficient way to distribute benefits while giving recipients quick and convenient access to their funds. The payment method supports billions of dollars in government benefit payments each year at a relatively low overall cost. However, the expenses associated with these programs vary considerably by activity. ATM fees represent the largest component of government prepaid card costs, followed by account servicing and customer service. Understanding where these expenses originate can help agencies and program managers identify opportunities to control costs while maintaining reliable access to government benefits.
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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Government Issued Prepaid Cards: Efficient Cash Access and Distribution.
ATM Fees and Management Costs Drive Government Prepaid Card Costs:
- In 2019, ATM Fees accounted for $97.37 million of an overall $152.69 million in program costs.
- The second largest government issued prepaid cost was ‘account servicing,’ totaling $33.3 million in costs.
- Customer service inquiries accounted for $12.36 million of a total $152.69 million in program costs.
- The last substantial driver of costs for government issued prepaid cards (2019) was ‘purchase transactions’, which cost $5.9 million.
- Payment card costs are very low at 1.12% (2019), and few cost categories can benefit from further optimization.
- ATM fees are kept to a minimum if the customer stays within a limit or network
About Report
Prepaid cards played a significant role in distributing CARES Act funds to 3.6 million Americans, but the payment form extends deep into many government benefit programs.
Ten benefit programs carried $136.2 billion in prepaid loads during 2019, but only incurred $152.7 million in costs among all government distribution channels. For those in need, prepaid cards provide quick access to funds and a reliable, safe way to receive cash value.
