Governments adopting electronic payments as an alternative to cash

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MasterCard has noted a growing global trend toward governments adopting electronic payments as an alternative to cash and check-based benefit programs. Most recently, the South African Social Security Agency (“SASSA”) distributed more than 2.5 million debit cards to social grant recipients across the country with a target of 10 million cards by March 2013. South Africa joins the United States, Italy, Canada, United Arab Emirates and Romania as the latest examples of governments going paperless as a cost-savings opportunity and a method of addressing the almost 2.5 billion people worldwide that lack access to financial services.

“By supporting governments around the world with electronic payment programs we are helping save money and improve efficiencies, but more importantly, together we are opening up a world of inclusion for those who have previously not had access to traditional financial services,” said Tim Murphy, Chief Products Officer of MasterCard Worldwide.

SASSA recipients are now able to use debit cards, issued by Net1 and Grindrod Bank, to pay for goods and to check their account balances free of charge. A key feature of the card is biometric functionality used to identify grant recipients using unique identifiers such as fingerprints, facial and voice recognition to prevent stolen card usage. The new system is already dramatically reducing SASSA’s operating costs and is expected to save the government more than ZAR3 billion (USD 360 million) over the next five years.

Other examples include:

  • The United States Department of the Treasury is also moving to all electronic payments, including the Direct Express debit card, which is used to deliver Social Security and other federal benefits. The program has roughly 3 million current cardholders, and that figure could increase substantially, as Treasury eliminates check payments in March of 2013. The program is expected to save the U.S. government $1 billion over the first ten years.
  • The Italian central government launched the “Carta Acquisti” Social Card program to assist citizens in need. The cards are being distributed through Italy’s 14,000 Post Offices, targeting 1 million benefits recipients.
  • Following the successful Italian model, in Romania, the Poste Romania also began distributing prepaid cards across the country to social benefit recipients.
  • The Toronto Employment and Social Services (TESS) recently launched prepaid benefits cards for the delivery of social assistance disbursements. The card allows recipients to receive benefits through an EMV chip-and-pin prepaid MasterCard and is expected save the city $2.4 million annually.
  • To ensure safe and timely disbursement of funds and to prevent fraud, in the United Arab Emirates, the Ministry of Labour requires agencies that arrange laborers for large contractors to transfer their wages electronically via MasterCard prepaid cards through the Wages Protection System.

Many more innovative payment solutions are in development to support inclusion of the financially underserved including in Mexico where a pilot is underway for the residents of Oaxaca to access a variety of financial instruments through their mobile phone’s SMS functionalities.

 

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Author:Steve Atkins

Steve Atkins is the main contributor and Editor in Chief of Contactless Intelligence – covering contactless, NFC, mobile and cloud-based technologies. Even with over twenty five years of experience in the high tech industry, he is still fascinated with all kinds of technology and the impact it has upon end users. He is currently based in Berlin, Germany.

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