The Power of Prepaid

Local authorities, health bodies and service providers are entering a brave new world of public service commissioning and delivery, combined with a radical transformation of the current welfare system.

Underpinning these changes are two central themes – personalisation, seen in the Government’s commitment to rolling out personal budgets, not only in social care, but in health, children’s services and supported housing; and integration, with local Health and Wellbeing Boards being charged with coordinating a range of services for different need groups, and the Universal Credit merging six separate benefits into a single payment. 

These two parallel transformations will mean that service budgets and benefits are increasingly being paid directly to the user – with inevitable overlap between those receiving different payments. Some people have suggested that a single pot of money paid to an individual – rolling up all of the various benefits and different service budgets – will be the ‘gold standard’ of a personalised, integrated, empowering state. 

This research by Demos is exploring the potential of prepaid card technology to achieve this ‘gold standard’. Prepaid cards are a cross between a debit card and a top-up card. The local authority – or the card user – is able to transfer money onto the card, which the user then spends until the balance reaches zero. Prepaid cards are widely used in the US for the payment of social security benefits, and some UK local authorities have adopted the cards - mainly for social care direct payments, but also for staff expenses, children’s services and other areas where the local authority would otherwise issue cash payments.

 

Demos will be exploring how lessons from this first generation of prepaid cards – where cards are used in individual service areas – can be used to shape the next generation – integrating service and benefits payments into a single lump sum. In doing this, we will seek to answer the following key questions:

• How could local authorities use prepaid cards more ambitiously, across different payments and service areas?
• What can we learn from the first generation of prepaid cards about the potential benefits and challenges of the prepaid system – for commissioners, providers and different groups of service users?
• What are some of the additional benefits and challenges of integrating personal budgets from a range of service areas, as well as Universal Credit payments, using a prepaid card?
• How can these practical challenges and concerns be overcome in the future?

 

Methodology

 Our multi-stranded research design will combine:

• A review of existing uses of prepaid cards in the UK, and international evidence from the US and Canada.
• In-depth case studies of local areas in the UK where prepaid cards are already being implemented, highlighting benefits and difficulties of the current prepaid system.
• Focus groups with potential prepaid card users, exploring their views of the benefits and risks of using a prepaid card, both for individual payments, and for integrated payments.
• A series of expert roundtables exploring the potential implementation of prepaid cards in a wider range of service areas in the future – including addressing practical issues and identifying new policy opportunities.

This report has now been published, and is available here.

 

Contact

For more information, or to be kept updated about the project, please contact Jo Salter.

 

This research is supported by MasterCard.

 

Related projects

Demos has carried out extensive market intelligence research with local authorities, helping them to predict how the rollout of personal budgets could impact on local heath and social care markets. Our most recent wave of findings, from across 10 local authorities, was published in Personal Best.

See also our report Tailor Made, exploring the future of personalisation, beyond personal budgets.