Noel Moran - CEO, Prepaid Financial Services Ltd.
With the migrant crisis in Europe showing no signs of slowing, and with freezing conditions being widely reported in camps, non-governmental organisations, aid charities, and governments are looking for new and innovative ways to distribute payments quickly and securely to save lives in the region.
Cash was the first solution deployed by a number of national governments, however, issues quickly arose. Delivering and distributing substantial amounts of cash to processing centres became an operational and logistical nightmare for governments, who also struggled to manage and monitor accurate disbursement to claimants. Cash payments also left refugees in a vulnerable position, making them easy targets for theft.
Aid charities were aware that many people stranded in camps needed access to cash, but were also struggling to find an effective way of providing access to funds. Many refugees are unbanked, so paying funds directly into bank accounts was not an option as it would only be available to a small proportion of the people needing financial support.
With no obvious benefits for the refugees or the organisations, it became apparent that cash payments were an impractical solution.
Alternative payment solutions for the unbanked
To combat these problems, prepaid cards, which do not require credit checks or a fixed address to be issued, have been provided to refugees and asylum seekers via governments and NGOs throughout the SEPA zone.
In addition to solving a number of problems that arise from cash distribution, as refugees will inevitably move across Europe, organisations have the ability to monitor spend activity across the entire EU, ensuring that migrants are safe. Several organisations have implemented limits on the amount of cash that can be withdrawn from ATMs, as well as setting up alerts to notify them if a certain number of declines are made at POS or an ATM, or when there has been no spend on the card for a set number of days. It is also possible to block spend right down to retailer/MCC level if necessary, and instant fraud alerts can be implemented, minimising risk.
Payment platforms that utilise the prepaid model are agile and work in real-time, providing reporting, monitoring and auditing, while streamlining operations and resources, enabling organisations to make payments to refugees via a fast and secure method, giving them access to financial services, and preventing financial exclusion.
The platform’s flexibility enables programmes to be highly customisable, allowing for different configurations to suit the needs of the government or NGO, meaning that the best possible prepaid solution can be delivered across the SEPA zone to its end users, as there are no issues with changing location or currencies when crossing borders.
For governments, there is a need to ensure that funds are being distributed fairly and according to the regulations, and a prepaid programme is capable of doing just that. Recently, it has been widely reported that cash payments hugely benefit refugees and others in crisis, but concerns have also been raised about how UK taxpayer’s foreign aid payments were being spent. With a prepaid card, it is easy to monitor and apply exclusions so that taxpayers can be assured that their money is being spent on foreign aid that genuinely helps people.
In addition to this, prepaid solutions eliminate cash completely from immigration centres and remove the logistical and security challenges of transportation faced by governments.
For charities, because prepaid cards can be issued and loaded quickly, this significantly cuts down the time required to disburse funds, meaning that aid workers’ time can be reallocated to provide more physical relief to refugees.
Benefits of prepaid for refugees
Aside from providing much needed financial support, unlike cash, prepaid cards provide asylum seekers with a way to gain more control of their finances and budget effectively without feeling discriminated against; prepaid card accounts come with online banking, and allows them to spend online, in stores and withdraw from an ATM, with contactless payment functionality - almost identically to a standard debit card - meaning they do not feel singled out.
Unfortunately, even once refugees have confirmed that they will be settled somewhere permanently, the struggle to access banking services does not stop there. Basic current accounts require a form of ID and a proof of address before opening an account; however, because there are no credit checks completed and no documentation is required to issue a prepaid card, refugees can apply to open a prepaid bank account instantly that allows them to set up regular payments, and get preferential rates on currency transfers when friends and family abroad load funds onto the card.
Prepaid offers considerable benefits for both the organisation distributing funds and the refugees they support. With the crisis in Europe looking to continue for the foreseeable future, it is crucial that more Governments and charities utilise prepaid as a fast and secure way to make disbursements to some of the world’s most vulnerable people.