Published Articles
Reloadable Open Loop Payment Cards
As we mentioned in a previous post, FDIS is working to provide better ways for the U.S. Government to issue the millions of payments it disperses each month. Because most of the payments are not considered one-time payments, 
it’s important to find a way that will allow recipients to receive their funds on time each month while reducing the costs associated with processing those monies. Enter Reloadable Open Loop Payment Cards. These promising solutions allow cost effective ways for the government to disburse payments in a timely fashion.
A government agency will set up what’s referred to as a “Master Account” with a bank that will handle the administrative aspects of the program. Anytime a new recipient is added to the program, this bank is notified so that a payment card can be issued. From there, the monies are electronically transferred, or “loaded”, each month. The recipient isn’t required to have a checking or savings account and the funds are available immediately. This, of course, reduces the massive amounts of paper the government has traditionally used while also reducing fuel costs used by the mail system for delivering checks. The advantages are many and a few include:
- Far more cost efficient – transferring funds via electronic methods is far more affordable than printing and mailing traditional payments.
- Allows for better money management for the recipient since the funds are available immediately. Previously, it could have taken days after the check was mailed before delivery.
- These open loop prepaid cards provide better security for recipients. They’re less likely to be stolen and when they are, if the thief does not have the PIN number, the card is useless to them.
- Tracking the way money is spent is easier.
Another reason these cards are a win-win is that fewer Americans have access to a bank account. More than a quarter of adult Americans do not have traditional bank accounts and that number’s increasing.
As you can see, reloadable payment cards are quickly becoming the new American currency. Other private employers are beginning to see the many advantages, as well. We will continue our series on the new technological advances and credit card processing services, so check back often!
