The hidden risks in government payments likely to affect recipients and taxpayers

For public agencies, the time to modernize public benefits payment programs has arrived

For state and federal agencies that administer public benefits, digital security and equitable access are critical components of successful programs that serve the most vulnerable members of our society.

Over the past 25 years, the government payments landscape has undergone significant changes. In the late 1990s, cash assistance programs transitioned entirely to electronic payments. And by 2003, other government agencies had adopted prepaid debit cards. Today, most state labor departments and agencies for children and family services across the U.S. use debit cards to distribute unemployment benefits and child support payments. This shift away from checks and warrants was driven by the high costs of handling, administration and postage, as well as the risk of theft.

Prepaid debit cards have emerged as a secure and cost-effective method of disbursement, providing recipients with safe, convenient access to their benefits at no cost. These cards have been especially crucial for the unbanked population, who lack access to traditional banking services.

But choosing to keep cash benefits and non-cash benefits on the same card falls drastically short of our industry's mission. The failure to transition to a separate prepaid card system not only exposes vulnerable recipients to significant security risks but also perpetuates inequities in accessing essential services. As public assistance programs aim to support those in need, it is crucial to adopt a more secure and fair approach.

Why a two-card solution is a necessary evolution in protecting and empowering communities

As we strive to enhance the safety and convenience of public assistance programs, an important innovation is emerging: the separation of cash benefits from non-cash benefits like SNAP. This two-card solution promises not only to bolster security but also to provide a far better experience and protection to constituents.

Currently, many government programs place cash benefits such as Temporary Assistance for Needy Families (TANF) on the same cards as non-cash benefits like SNAP (Supplemental Nutrition Assistance Program). While this might seem like a streamlined approach, it introduces significant risks and inconveniences for the recipients.

Skimming fraud, a method by which criminals steal card information through devices installed on ATMs and point-of-sale terminals, is a looming and ongoing threat. When both cash and non-cash benefits are on a single card, the risk of fraud increases, making recipients vulnerable to theft and financial instability. This is particularly detrimental for individuals who rely heavily on these benefits to meet their daily needs.

The path to modern, secure government payments

The proposed solution is straightforward yet effective: separate the cash benefits from the non-cash benefits onto different cards. Specifically, cash benefits should be moved to a separate, EMV-enabled network-branded prepaid debit card. This approach has several key advantages:

1. Enhanced Security: EMV-enabled cards are equipped with chip technology that is far more secure than traditional magnetic stripe cards. This technology significantly reduces the risk of skimming fraud at ATMs and other payment terminals. By placing cash benefits on these more secure cards, recipients can have greater confidence that their funds are safe. Additionally, each recipient is protected by $250,000 in FDIC insurance.
2. Improved Accessibility: Network-branded prepaid debit cards are widely accepted and offer the same service experience as standard debit and credit cards. This means recipients can use their cards more flexibly, not just for purchases but also for paying bills, accessing cash, and more. The increased acceptance and functionality of these cards can make managing finances easier and more convenient for benefit recipients.
3. Equitable Service: Providing cash benefits on a separate card ensures that recipients have the same level of service and security as any other debit cardholder. This not only enhances their financial stability but also treats them with the dignity and respect they deserve. It acknowledges their right to safe and flexible access to their funds without the added stress and risk of potential fraud.

Benefits for states and constituents

Adopting this two-card system benefits both constituents and agencies. For constituents, the primary advantage is the enhanced security and convenience of accessing their cash benefits. By reducing the risk of fraud, recipients can maintain financial stability and focus on improving their quality of life.

For state agencies, implementing this system can lead to long-term cost savings. Fraud prevention measures reduce the need for costly investigations and reimbursements. Additionally, offering a more secure and user-friendly system can improve the overall perception and efficiency of public assistance programs.

Partnerships matter

In the complex landscape of government benefits distribution, effective partnerships make the difference. With 113 programs across the U.S., our team at Conduent exemplifies the power of a strong partnership approach in deploying network-branded prepaid debit cards for government benefits. Conduent's comprehensive, end-to-end Way2Go card offers accountability, cost savings, and a seamless experience for both constituents and state agencies. Unlike other EBT vendors, we manage program administration and customer service in-house, ensuring a consistent and reliable partnership that maximizes efficiency and support for all stakeholders involved.

Based on more than 25 years of experience, the transition to two-card systems helps provide the following for clients:

1. Reduction in skimming fraud
   Cash benefits are moved onto a separate EMV chip-enabled, network-branded prepaid debit card, maximizing anti-fraud protections. By separating cash and SNAP benefits, EBT cards are no longer needed at ATMs, significantly reducing exposure to skimming fraud for SNAP and WIC funds.
2. Improved constituent convenience and flexibility
   Recipients of cash benefits can use their network-branded prepaid debit cards like any other debit or credit card, making purchases and paying bills anywhere electronic payments are accepted, including online. This eliminates the need for constituents to withdraw cash from ATMs for non-SNAP purchases, streamlining their financial management.
3. Multiple ways to check balances and access funds
   Through the Way2Go cardholder portal, constituents can check card balances, make retail purchases, withdraw funds at in-network banks and ATMs, and transfer funds to bank accounts at no cost. Similarly, states can customize programs to better meet constituent needs, enhancing user satisfaction and accessibility.
4. Extended anti-loss protections
   Network-branded prepaid debit cards come with zero-liability programs, ensuring stolen funds are replaced by the card network.

The separation of cash and non-cash benefits onto different cards is a vital step towards improving the security and service of public assistance programs. By moving cash benefits to EMV-enabled network-branded prepaid debit cards, we can protect vulnerable constituents from fraud, enhance their access to funds, and ensure they receive equitable and dignified service. This solution not only addresses immediate security concerns but also paves the way for a more reliable and respectful system of support for those who need it most.

Ready to discover how Conduent Government solutions can help your agency streamline payments and protect against fraud? Visit us online to contact an expert now.

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