The National Prepaid Cards Steering Group Colin Whitehouse Independent Govt. Advisor Chair – National Prepaid Cards Steering Group

National Prepaid Cards Steering Group Created in May 2011 Independent group, supported by MasterCard Northern and southern based groups 50 Local Authorities, 4 Programme Managers & MasterCard Assess sector requirements and capture best practice Share best practice, issues and problems for mutual benefit Programme Managers can better shape their products to true market needs

Prepaid Cards - guidance resource Specification based on what Councils said they need, or would have liked to have known before they started Content based entirely on the experiences of Councils who have implemented schemes or are in the process of doing so Programme Managers contributed their experiences of implementation and practical issues Advanced Payment Solutions (APS), Allpay, Corporate Pay, Prepaid Financial Services (PFS) Steering Group members provided documentation to create a supporting online resource

How do prepaid cards help to transform services? - because they address all four principles of successful service redesign Prepaid cards are proven to improve the lives of customers, increase staff morale, reduce costs and eliminate errors - helping you to spend more of your budget on service delivery and reduce unnecessary costs Understanding the needs of customers, what works well for them and what they don’t like Understanding the perspective of the people who deliver the service from day to day, as they know where the delivery problems lie Identifying the causes of wasteful work that is done e.g. trying to correct ‘failures’ in effective service delivery: the unnecessary customer contact & strain Understanding the performance of the process of delivery by measuring how well it delivers what customers want, & seeing how work flows between different people ‘Good practice’ service transformation principles are pretty hard to argue against

What are Prepaid Cards and how do they work? Funds are uploaded onto card by Council and/or service user Cards can be then used in a similar way to credit/debit card, but: ATM/cash back use is often blocked Spend can be restricted by merchant or by category Balance cannot fall below zero (not true of all providers) Direct Debits and Standing Order facilities Service Users can monitor transactions and balances online Telephone support can be provided by programme manager Councils have access to transaction level details

Main business benefits Replaces cash handling - safer and more secure Good management information (the no.1 benefit) Makes more effective use of staff time Supports personalisation and commissioning agendas Monitored spend leads to better outcomes Easy to track client contributions Possible income generation opportunities No major IT investment required

Main service user benefits Prepaid cards are generally available to all, regardless of financial circumstance No need to carry and manage cash Promotion of life skills / social inclusion Access to better services and lower online prices Quicker access to funds Easy monitoring and management of balances Funds cannot be ‘lost’ by disappearing into an overdraft

Typical categories of use Direct payments Disability allowances, young people leaving care Budget management and monitoring Petty cash replacement, travel expenses, vouchers Instant issue Cards can be loaded instantly 24/7 Children’s services, asylum seekers, staff payments Councils can carry a stock of cards for emergency use

Typical business uses Solving service user based problems Unbanked service users - replaces cash And unbanked users can pay 8% to cash cheques Monitoring appropriate spend of funds Easy reporting of transactional use, automatic triggering of reports Replaces the chasing and processing of paper bank statements Taking back funds when necessary Funds remain property of the issuing Council Better information allows effective service/demand planning As an employer Payments to temporary or agency staff, assistance/relocation payments Travel and other expenses, Elected Member expenses become instantly transparent Replacing petty cash in catering, housing repair etc.

Case study: Personal budgets Lancashire County Council £2m savings from £40m direct payments budget Use of prepaid cards is mandated for all new recipients* Plan to have all 3,000 direct payments recipients using prepaid Effective use of small teams, reduces need for additional staff Risk management based use of information should halve the need for visits Typical usage: Cards loaded by BACS transfer as an alternative to a holding account Service users load funds by SO or transfer, by phone or internet Cards can be used by nominated carer / assistant / social worker Recurring payments can be made by DD/SO

Case study: other examples from the Steering Group Directed activities for young people Service user payment to day care and supported employment providers Personal expenses for clients in residential accommodation / in receipt Court of Protection orders Replacing handling of cash for: Young people leaving care Asylum Seekers – Looked After Children Emergency payments One NW Council estimates savings of 4 FTE’s simply by not handling cash

Some Frequently Asked Questions - 1 Ownership of the funds is determined by the Council and affects the configuration of the scheme If a client dies then a predetermined process is designed to handle repayments Money laundering regulations are satisfied by Council based identity verification Cards issue may be prevented by: Age Inability of client to pass ‘Know Your Client’ checks Being on either a sanctions or politically exposed persons list

Some Frequently Asked Questions - 2 Usage can be restricted by enabling or blocking Merchant Category Codes and/or ATM use during setup phase Use of active cards can be instantly blocked if necessary Prepaid cards can be used a smart cards for a range of services costs are currently quite high but expected to fall significantly Typical transaction detail: Time of transaction Merchant description Value Prepaid card data can be integrated into existing financial systems in a number of ways (some very simple)

Contents of the guidance document What are Prepaid cards and how do they work? What typical business benefits can they deliver? How would our clients benefit? How much do they cost to operate? Where might they be used? Case Studies In which other service could they be used? How do I create the outline business case? How do I arrive at my current costs? FAQs

Examples from the online resource Guide to the use of Prepaid cards for service users Cardholder agreements Council / Direct Payments agreement Prepaid cards business case Options appraisal report Project Initiation Document Tender specification Marketing brochures Sample Invitation to Tender Sample Pre Qualification Questions …………. and more

Next stages Detailed benchmark costings exercise Expansion of case study library and online resource Expanded membership and scope of Steering Group Widening scope to examine opportunities for other public sector agencies, and using prepaid cards to promote more joined-up services Examination of further uses Social Fund Universal Credit Personal Health Budgets Subject to securing funding from February 2013

For further information To: ask a question after today request further copies of the guidance suggest regional launch event delegates become a member of the National Steering Group request a meeting to discuss your potential applications obtain contact details for Councils who have successfully implemented prepaid cards

“ Prepaid cards are a great way to get things done, they’re easy to use and safer and more secure than cash” – London Borough “Prepaid cards allow us to focus on monitoring high-value processes, they allow all Council departments to manage more effectively” – London Borough “I’ve been able to take responsibility for my entire budget by using the Prepaid card for activities and equipment” – County Council Care Leaver Questions?

Question and Answer Session Do you have any experiences of Prepaid cards? In which service areas do you think you would best be able to use them: to save money? to improve services? to quickly make a difference? In your Council, what are the biggest problems which stop you from going ahead with this type of initiative? What can the Steering Group/Programme Managers do to help you get started? What else would it be helpful to see in the guidance resource?