Alliance & Leicester launches pre-paid card scheme for housing benefit claimants

Source: Alliance & Leicester

Alliance & Leicester Commercial Bank is rolling out a prepaid card payments solution for local authorities in the wake of the government's scheme to transfer payment of housing benefit to claimants, as opposed to their landlords. A prepaid card scheme will allow local authorities to save up to 75 per cent of their processing costs for the payment of housing benefits, as well as remove the - on average - 10 per cent charge to the recipients when converting cheques to cash.

The change in the way housing benefits are paid came into force on 7 April, following the recommendations in the January 2006 Welfare Reform Green Paper - Empowering people to work. The report was aimed at financially empowering lower income tenants.

The prepaid card solution is particularly aimed at the 800,000 UK citizens who receive housing benefit, while being classified as "unbanked" (i.e. without access to a deposit or current account).

John Schratz, Director of Sales and Marketing, Prepaid Cards at Alliance & Leicester Commercial Bank says: "The prepaid card is available to everyone, regardless of financial situation or history - offering financial inclusivity as well as a cost effective payment solution for the local authority. The card aims at not only supporting the local authority in its efforts towards financial inclusivity for all recipients, but also seeks to improve efficiency and increase the services that can be offered to the unbanked benefit claimant through advanced functionality."

The prepaid card works in the same way as a Visa debit card, allowing claimants to access funds from ATMs, banks and building society branches, as well as providing live account balance information, and online and telephone access for account servicing. The prepaid card scheme also does not require any major IT system developments for the local authority.

John Schratz adds: "The prepaid card product has applications across the board for local authorities. It can be used not only for the payment of benefits, but also for additional internal requirements such as staff expenses and as a flexible payment solution for temporary workers."

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