2007 Banking Colloquium
Workshop No. 4 Debit Card Project - Income Support Clients

• Adobe Acrobat Version [PDF 1.3Mb]

What Was The Inspiration

• Already looking for Ideas
• Someone with an idea approached us

Why We Chose the Debit Card

• Real time setup and access to funds
• Increased Security for Client
• Significant reduction of paper cheques
• Reduction in cost to clients
• Last year, cheque cashing agencies collected $600,000 in processing cheque cashing service fees
• Debit Cards issued at Delivery Offices
• Client ‘PINS’ card at time of initial distribution
• Funds are immediately advanced and available via the Debit Card for the client

Reasons for the Pilot Project

• Create processes for issuing and controlling Debit Cards
• Determine partnership to look for in a Vendor
• Create controls to safeguard Debit Cards
• Discover possible 3rd party requirements (Interac approved process and bank required to be Canadian Payments Association Member)

How To Gain Acceptance Of The Idea

• Have well developed concept
• Involve key stakeholders
• Develop enthusiasm of front line staff

Debit Card Process

• Individuals in need visit a District Office for assistance

Client Applies for Benefits

• Interview
• Eligibility Determination
• Benefit Calculation
• Benefit value entered in the Debit Card system

Debit Card Approval

• Worker goes to supervisor for approval
• Senior Administrative Support Staff assigns Debit Card to the client profile and approves the advance

Cardholder Agreement

• Client signs the Cardholder Agreement

Client Possession of Debit Card

• After Cardholders Agreement has been signed, a worker gives the Debit Card to the Client

Pinning Device Activation

• Worker activates Pinning Device

Client Pinning

• Client swipes Debit Card
• Client creates a personal PIN

Completed Debit Card Process

• Client’s Debit Card is immediately ready for use at any ATM or Point of Sale device

Purchasing Goods / ATM

• Client is able to purchase goods or services through a Point of Sale device
• Client is able to withdraw cash at any ATM
• No restriction on type of goods or services a Client purchases

Client Loss of Debit Card

• Clients phone Help Desk to cancel Debit Card
• Client goes to District Office to get a replacement Debit Card
• Remaining balance is transferred to the new Debit Card

Client Questions

• 24-hour Help Desk
• Interactive Voice Response (IVR) provided for Balance information
• Internet access
  • Statements
  • Transaction History

Frequently Asked Questions

• Clients have called the Help Desk with the following inquiries:
• Cancel their Debit Card
• Balance Inquiries
• Reset Internet access password
• Statement inquiries

Challenges Overcome

• FOIP
  • Privacy Impact Assessment
• CPA
  • Liability of Payments
  • Controls
• Interac
  • Methodology

Why A Pilot Project

• The Department conducted a Pilot Project to determine if a benefit card was a viable payment option
• Pilot ran between March 2006 and August 2006

Benefits and Knowledge Gained

• Processes needed to issue and control Debit Cards
• What to look for in a Vendor (partnerships – major bank to provide family of ATMs)
• Controls required related to “Know Your Client” and the “pay / no pay decision”
• How Interac and the Canadian Payments Association are involved
• Legislation in relation to pilots (Banking Act and Fair Trades Act)

Pilot Project Evaluation

• External evaluator chosen for the Debit Card Pilot
• Arms length results provided more credibility
• Results could be published with a greater assurance of impartiality

Independent Evaluation Summary

• Clients prefer Debit Cards over paper cheques for the following reasons:
  • Immediate benefits issuance
  • Convenient
  • No transactional costs
  • Feel safer carrying less cash

Client Feedback

• Majority of Debit Card recipients indicated they had:
  • no difficulties receiving their funds
  • they felt they were saving money by having their funds transferred to them via Debit Card
• “I want to continue receiving my funds through the current method of transfer”

Benefits for Clients

• Security
  • PIN
  • Replacement
  • Less cash on hand
• Less travel time
• No cheque cashing fees
• Less opportunity for fraud

Benefits for Department

• Significantly reduces potential fraud
• Increases admininistrative efficiency
• Cost savings

Debit Card Policy

• EFT is the preferred payment method
• Debit Card issued to a Client:
  • In an emergency
  • For the first month of benefits
  • If unable to obtain a bank account
  • One-time issues

Costs

• Cost of producing a cheque - $25 to $50
• Current cost of Debit Card - $16
  • Currently covering all Client ATM fees
• In the Provincial Implementation costs will be split between the department and the client – based on internal policy and contracted rates

Transaction Fees

• Transaction fees charged for card usage
• Department currently refunds the transaction fees to the Client
• Still a more cost efficient alternative compared to cheques

Internal Controls

• Segregation of Duties
• Process and System Controls
• System Interface
• Operational and Managerial Reports
• System Audit

System Risk Minimization Strategies

• Training
• Reconciliation
• Supplemental Information

The Future

• Provincial Implementation planned to begin this summer and rolled out as a worksite is ready instead of all work sites at once.
• Clients become more fiscally responsible
• Future Possibilities:
  • Issue emergency benefits to existing Debit Card Clients via telephone interview
  • Use by other Government Ministries
  • Assign Payments to a specific vendor

Questions ?