CFSI Nonprofit Guide to Prepaid Cards

The Nonprofit’s Guide to Prepaid Cards

Brought to you by the Center for Financial Services Innovation

With support from the Network Branded Prepaid Card Association, NetSpend® Corporation, and the Annie E. Casey Foundation

The Nonprofit’s Guide to Prepaid Cards 2

Dear Reader:

Prepaid cards are everywhere. Look around, and you’ll see them offered online; on television; in supermarket or retailer checkout lines; by check cashers and tax preparers; and even in some bank lobbies. In 2009, the FDIC estimated that approximately 10 percent of U.S. households, including 12 percent of unbanked and 16 percent of underbanked households, use prepaid cards, and that number is increasing rapidly.

The Center for Financial Services Innovation (CFSI) works to transform the financial services marketplace so that underbanked consumers can achieve financial prosperity. Since our inception in 2004, we have championed prepaid cards as a financial product that, with the right features, pricing, and consumer protections, can provide real benefits to the country’s 30–40 million unbanked and underbanked households.

CFSI created this resource guide for nonprofit organizations that are working on consumer finance issues and are interested in learning more about prepaid cards. The guide provides a basic primer on prepaid, as well as tools to help you explore how to incorporate prepaid into your programming. It draws from CFSI’s wealth of research and experience with underbanked consumers, the prepaid industry, and nonprofit organizations’ efforts to connect the two.

Who Should Read This Guide?Nonprofit community-based organizations•

Nonprofit policy, research, and/or advocacy organizations•

Regulators/government officials•

Funders•

After reading this guide, we hope you will, at a minimum, have a better understanding of prepaid cards and their potential benefits. We also hope you will be better equipped to incorporate prepaid into your programming to the extent that it fits with your mission and capacity—whether that means being ready to answer your clients’ questions or going so far as partnering with a financial services company to distribute the cards yourself.

What This Guide Does Not IncludeThis guide does not include a ready-made curriculum for educating consumers about prepaid or a “train-the-trainer” program. It also does not provide legal or business advice, nor does it offer an organized list of prepaid card providers or details about particular card programs’ fees and features.1 Given the industry’s size and its rapidly evolving nature, this information is difficult to gather and to keep current. Most importantly, this guide is not intended to make decisions for your organization, but rather it will reveal what additional information you need to gather so that you can make your own decisions about how to engage with prepaid cards.

Stay in TouchWe wish you the best of luck as you begin your work with prepaid cards. As you go forward, we want to hear from you. We welcome your feedback on this guide and encourage you to email us at [email protected] with your questions and comments, and to tell us about your experiences, innovations, and best practices.

The CFSI Team

September 2010

1 There are many online prepaid card comparison tools such as CreditCards.com http://www.creditcards.com/prepaid.php, Credit Card Guide, http://www.creditcardguide.com/prepaid.html, and Compare Cards http://www.comparecards.com/compare-by-category/prepaid-debit-credit-cards/page/1; however CFSI cannot vouch for the accuracy or completeness of the information provided on these websites.


This guide would not have been possible without the generous support of our sponsors—the Network Branded Prepaid Card Association (NBPCA), NetSpend® Corporation, and The Annie E. Casey Foundation. CFSI would also like to acknowledge Joshua Wright, who contributed significantly to this project, as well as Jennifer Sierecki, Janet Raffel, and Katherine Lucas-Smith, who reviewed drafts and provided useful feedback.

Acknowledgements


Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A Role for Nonprofit Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

About This Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Part I: Prepaid Primer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 What Is a Prepaid Card? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 How Do Prepaid Cards Work? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Short-Term Loans/Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Fee Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 How Do Prepaid Cards Compare with Other Payment Products? . . . . . . . . . . . . . . . . . . . 14 Comparison with Other Transactional Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 A Note About Wage Garnishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Overdraft Protection on Prepaid Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

The Prepaid Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Economic Overview of the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Legal and Regulatory Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Benefits and Issues for Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Potential Cost Savings with Prepaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Part II: Opportunities for Nonprofits to Engage with Prepaid . . . . . . . . . . . . . . 24 The Engagement Continuum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Key Considerations in Choosing an Engagement Strategy . . . . . . . . . . . . . . . . . . . . . . . . 25 Levels of Engagement with Prepaid Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Information and Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Referral and Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Appendix A: Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Understanding Clients’ Financial Services Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 One Nonprofit’s Distribution Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Appendix B: Legal and Regulatory Issues that Impact Nonprofit Prepaid Card Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Appendix C: Selecting a Prepaid Card Provider Partner . . . . . . . . . . . . . . . . . . 41

About CFSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

About the Sponsors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Table of Contents


An estimated 30–40 million American households are considered unbanked or underbanked.1 This means they either have no account relationship with a mainstream bank or credit union, or if they do, they also rely on nontraditional financial services such as check cashing, money orders, and payday loans to meet their financial services needs. These underbanked consumers spend $13 billion each year on non-bank basic financial service transactions.2 Many of these transactions are costly, but individuals rely heavily on these non-bank providers because traditional financial services often do not meet their needs. The underbanked need the ability to turn their paychecks and/or government benefits checks into cash quickly, pay bills, buy basic necessities, establish savings, transfer money to friends and family, borrow money for emergencies, and build assets over the longer term.

A number of financial institutions and other organizations are developing solutions to address the needs of this underbanked market. Many banks and credit unions offer low-cost or free checking and savings accounts, and some offer payday loan alternatives and check-cashing services. However, low-cost, high-quality financial products and services are not widely available in all communities across the country, and those that are do not necessarily meet all of the needs of the large and multifaceted underbanked population.

General-purpose reloadable prepaid cards present a promising part of the solution to meeting the financial needs of the underbanked. These cards function like electronic bank accounts without checks. Consumers can load funds onto their cards and can spend only what they load, providing immediate liquidity while limiting the risk of overdraft. Prepaid cards may be a good entry-level financial product for individuals without a traditional checking account. Like a bank account, they provide a safe way to carry an account balance, manage cash and—because they can generally be used wherever MasterCard® and Visa® are accepted—pay for purchases. Some have attached savings accounts with automated deposits—features that can help people build savings. Furthermore, prepaid cards may encourage the use of additional financial services, moving individuals into the economic mainstream and onto a path toward greater financial prosperity.

Research suggests that many consumers derive benefits from their prepaid cards: in a 2009 survey of 400 underbanked prepaid card users, conducted by CFSI and the Network Branded Prepaid Card Association, 78 percent of respondents told CFSI that their cards were very or extremely useful, 74 percent said they were very likely or certain to recommend the card to others, 60 percent used their cards weekly, and 12 percent reported daily use.3 However, prepaid cards may not be for everyone. A card’s usefulness depends on its associated fees and features, as well as the needs and behaviors of customers using the card. A useful product is generally thought to enable customers to meet their transactional needs in a cost-effective way and to provide them with a path to savings and credit-building opportunities.

1 The Federal Deposit Insurance Corporation’s (FDIC’s) December 2009 National Survey of Unbanked and Underbanked Households [http://www.fdic.gov/householdsurvey/] estimates 9 million unbanked households and 21 million underbanked, while CFSI’s 2008 Underbanked Consumer Study [http://www.cfsinnovation.com/publications/list/CFSIUnderbankedConsumerStudy] estimates 18.5 million unbanked households and 21.6 million underbanked. Differences in the unbanked estimates are likely due to differences in research methodologies.

2 CFSI estimate based on publicly available financial services transaction volume data and average industry fees. 3 Satisfaction with and Usage of Prepaid Cards, NBPCA/CFSI Survey Results, http://www.cfsinnovation.com/topics/article/330558,

April 2009.

Introduction


A Role for Nonprofit OrganizationsGeneral purpose reloadable prepaid cards are widely available, but not well understood. As prepaid cards are a potentially beneficial product in helping consumers meet their short-term financial transaction needs and possibly their longer-term savings and credit-building goals, nonprofit organizations can play a critical role in shaping the public discourse and educating consumers about the products, helping them make informed choices. In addition, some organizations may decide to go further and more directly connect consumers to prepaid card products by making referrals to individual or multiple providers or becoming distributors of cards themselves. Nonprofits can add significant value in the prepaid supply chain, as the prepaid card industry is increasingly coming to recognize.

Over the past few years, CFSI has seen growing interest among nonprofits in prepaid, and received increased requests for information about the product and opportunities to engage more deeply with the industry. We conducted two unpublished surveys of nonprofit organizations: one in late 2008 with 125 respondents that collectively serve more than 5 million underbanked consumers; and the second in late 2009 with 51 respondents, all engaged in free tax preparation. In both surveys, 78% of respondents said they would consider incorporating information about prepaid cards into their financial education programming, and the majority also expressed an interest in distributing cards to their constituents, with 14% already doing so.

About This Guide

This guide is designed to be a practical tool for nonprofits at various levels of understanding and interest in prepaid cards. The guide has two main parts:

Prepaid Primer—this guide will provide a detailed overview of prepaid cards, how they work, 1. the industry structure, and the benefits and issues for consumers.

Opportunities for Nonprofit Organizations—this guide will outline several options for nonprofits 2. to engage with prepaid, strategic considerations to help you select the right approach, and tips for success with the path chosen.

After reading this guide, we hope you will have an improved understanding of prepaid cards and will be better equipped to incorporate prepaid into your organization’s programming.

INTRODUCTION


What Is a Prepaid Card?

The term “prepaid card” refers to a wide range of cards that store money electronically and serve a variety of purposes. Prepaid phone cards were first introduced in the 1970s. Since then, the product type has expanded to include a wide range of related products, including store gift cards, healthcare flexible spending and defined benefit cards, federal and state benefits cards, payroll cards, and general-purpose cards.

Cards can be grouped based on two criteria: they can be (i) either closed-loop or open-loop and (ii) either one-time use or reloadable.

Closed-loop —The money stored on these cards can be used only in certain stores and/or on certain goods and services.

Open-loop—These cards are issued by a financial institution and the funds may be accessed in any location that accepts the card payment network (e.g., MasterCard®, Visa®) for any type of purchase.

One-time use—These cards can be loaded only once. When the money is spent, the card is no longer useable.

Reloadable—These cards can be reloaded with money again and again.

Furthermore, the main application of the card is often determined by who loads funds onto the card. As illustrated in Figure 1 on the next page, these parameters map out the prepaid card space.

Part I: Prepaid Primer


PART I: PREPAID PRIMER

8

This guide focuses exclusively on general-purpose, open-loop, reloadable (GPR) prepaid cards carrying one of the major payment network brands (such as MasterCard® and Visa®). GPR cards have many advantages over closed-loop cards, including wider acceptance and more consumer protections; closed-loop cards facilitate spending only within the closed loop. For the rest of the guide, prepaid cards will refer only to general-purpose, open-loop, reloadable (GPR) prepaid cards.

Figure 1 – Types of Prepaid Cards

Travel

Incentive/Bonus

Disaster Relief

Rebate Refund

Social Security

Payroll

General Purpose Reloadable*

Who Loads the Card?

Employer

Corporate

Government

Consumer

* General Purpose Reloadable Cards are the focus of this guide

Promotional

Gift

Phone Cards

Welfare

Money Transfer

Healthcare and Defined Benefit

Ope

n-lo

opC

lose

d-lo

op

ReloadableOne-time use



9

How Do Prepaid Cards Work?Prepaid cards function like checkless checking accounts. They enable the user to load money onto the card, store the money safely, and spend or withdraw the funds in a variety of ways. Technically, prepaid cards are debit cards, meaning they are plastic cards issued by a financial institution that are used to make purchases. That purchase amount is deducted directly from the cardholder’s account. However, the term “debit card” is most commonly used to refer to cards associated with checking accounts, and that is the definition used in this guide. Prepaid cards are a type of debit card with no associated checking account.

Prepaid cards are issued by financial institutions, carry one of the major payment network brands, and are accepted wherever those network brands are accepted, just like a debit card associated with a checking account. The features and fees associated with the cards vary widely. Tables 1A and 1B (pages 10 and 11) summarize basic and advanced card features. Information about pricing and fees can be found in Table 2 (page 13). The vast majority of prepaid cards include all of the basic features, which enable a user to handle most simple financial transactions, and a growing number include the types of advanced features described below.

Figure 2 provides a visual representation of how prepaid cards work.

Figure 2 – How Prepaid Cards Work

Load/reload money onto FDIC-insured card

1Store and

manage money

2Spend money in a variety of ways

3

Direct Deposit

Loading Networks (e.g., Green Dot, MoneyGram, Western Union)

Government Benefits

Tax Refunds

Proprietary Loading Networks

ATM Withdrawal

Retail Point of SalePIN•Signature•

Retail Cash Back

Electronic Bill Pay

Transfer to a 2nd Card

Remittance

General Spending Savings

Check balances via:Online•Phone•ATM•

Text Message Alert•Online Budgeting•

Reloadable Prepaid Card

5151 5800 1234 5576

Cardholder Name 12/10

Photo

Network Logo

Basic Features Advanced Features

Key



10

Table 1A – Basic Card Features

Feature ExplanationCash loading Prepaid card users can add funds onto their prepaid cards in-person at MoneyGram and Western Union

locations, as well as at many check cashers, grocery stores, and convenience stores that participate in the GreenDot, ReadyLink, or rePower prepaid networks (see Figure 3 on page 18).

Direct deposit Paychecks (if employer offers direct deposit) or government benefits can be directly deposited onto the card, usually for free.

Point of sale (POS) purchase with your signature

Pay for purchase in stores anywhere the network brand is accepted, and sign as you would with a credit card purchase.

POS purchase with a Personal Identification Number (PIN)

Pay for purchase in stores anywhere the network brand is accepted, and type in your confidential PIN as you would with a debit card.

ATM cash withdrawal Withdraw money at any ATM in the card’s network (e.g. Cirrus, Plus, etc.). If you use an ATM that is not owned by the issuing bank, there are often associated fees from both the card company and the bank or company that owns the ATM. Several card programs allow access to surcharge-free ATM networks, like Allpoint.

Cash back with purchase

Withdraw money from the account for free at most major supermarkets and drugstores when you make a purchase.

Check balance online Use a secure password to check your card balance online, usually for free.

Check balance over the phone

Call a phone number to check your card balance using an automated system or with a live customer service agent. If you request to speak to an agent, there is often a fee.

Check balance at an ATM

Use an ATM in your card’s network to check your card balance, usually for a fee.

FDIC pass-through insurance

FDIC insurance is a basic consumer protection most commonly associated with checking and savings accounts. It insures customer deposits at FDIC member banks for up to $250,000 in the event of a bank failure. Since 2008, FDIC insurance has been available for individual prepaid card account holders as long as certain conditions are met by the prepaid provider. Mainly, the pooled account at the issuing bank must be identified as a custodial account, and the funds deposited by the provider at an FDIC-insured depository institution must be identifiable and traceable to the individual card account holders. Most major card providers comply with these requirements, but this should be confirmed before entering into an agreement with any prepaid card provider. FDIC insurance is a particularly important benefit for prepaid card users, who tend to have lower incomes and can least afford to lose access to their money.

Fraud protection Payroll card accounts are covered by the Electronic Fund Transfer Act (EFTA) and offer a full range of error-resolution procedures. Most issuers of GPR cards provide EFTA-like protections for cardholders. Further, GPR cards are subject to the card brands’ “zero-liability” policies. Like a credit card, if the card is used fraudulently, the cardholder can dispute the charge and cannot be held liable for more than $50 in charges. Unlike a credit card, this is not a legal requirement, but it is the current practice for MasterCard® and Visa®.



11

Below are the most common advanced features on prepaid cards. However, the industry is evolving rapidly, and new features are being introduced regularly. For any nonprofit organization actively engaged with prepaid, it is important to stay abreast of new developments and changes.4

4 For more information about PRBC, see http://www.microbilt.com/nontraditional-credit-report.aspx.

Table 1B – Advanced Card Features

Feature ExplanationOnline bill pay Allows the cardholder to pay bills securely online. Payment can be made electronically, or a paper check can

be sent if the payee does not accept electronic payment. This is very similar to the bill pay feature offered on many checking and savings accounts.

Credit building Cardholders who pay recurring bills through online bill pay can elect to have regular monthly payments reported to an alternative credit bureau such as Payment Reporting Builds Credit (PRBC)4, enabling consumers to build a credit record.

Savings account Provides a way to set aside money into a separate savings account linked to the card, either a separate card for the savings account or a savings wallet connected to the same card. This money cannot be spent unless it is intentionally moved from the savings account into the general spend portion of the card. Some cards allow cardholders to set up recurring automatic transfers from the general spend account into the savings account. Preliminary data show that having an automated savings account is one of the best tools to help people build savings. Many prepaid card providers offer a competitive Annual Percentage Yield (APY) on savings.

Online budgeting Enables cardholders to set monthly budget targets by category and in total. Cardholders receive automatic alerts via email or text message when they have gone over budget.

Account information via text messaging

Cardholders can sign up for both text message alerts that are automatically sent to them (i.e., cardholders can receive a text every time they perform a transaction with the transaction amount and current remaining balance, or daily text messages with current balance) and/or for the capability to send text messages to request specific information (e.g., by sending a one-word text message reading “balance” to a short code, the cardholder instantly receives a text back with their current available balance).

Second card There are two types of second cards. One allows access to all the funds on the card, like a joint card. The other only allows access to amounts specifically transferred onto the second card.

Remittance Enables transfer of money to other countries, either for pick up or for withdrawal off of a second card.

Photo A picture of the cardholder on the card makes the card a secondary form of identification and provides added security.

Line of credit/ Short-term loan

The cardholder can apply for a short term loan on the card. This is usually available only if you have recurring direct deposits. The loan is automatically paid back when the next direct deposit occurs. (See sidebar on Short Term Loans/Lines of Credit on page 12.)

Overdraft protection Many prepaid card providers offer an opt-in overdraft protection feature tied to a card for a fee that enables cardholders to make purchases or ATM withdrawals for amounts greater than the balance in their card account. (See sidebar on Overdraft Protection on page 16.)

Proprietary loading network

Allows nonprofit organizations that distribute cards to offer reloading services on-site.

Person-to-person transfers

Some prepaid companies allow free or low-cost transfers of funds between their cardholders via the Internet or text message.

Insurance Some prepaid cards offer insurance benefits such as Accidental Death and Dismemberment coverage at no or low cost.



12

Short-term loans or lines of credit are increasingly offered through prepaid cards, and such products are evolving rapidly. Fees and interest rates for these credit products vary widely. While most are lower cost than payday loans, many still may be considered high-priced. Nonprofits can help clients determine whether such products are right for them. Used occasionally and paid off promptly and in full, such products can be beneficial to the consumer who has few or no other borrowing options. When used frequently or to roll-over to pay off other loans, they can impose an untenable debt burden on the customer.

Below are two examples of credit products tied to prepaid cards with different pricing, terms, and features. Examining these products will help you better understand the short-term loan/line of credit services offered in the prepaid card industry.

iAdvance (www.myiadvance.com)—Offered by Metabank, iAdvance is available to consumers that have direct deposit onto an eligible prepaid card. The consumer applies and receives the credit limit online or by phone, and the loan is made and becomes available in a matter of minutes. The fee is $2.50 for every $20 advanced, resulting in an APR of 150 percent. The entire loan amount is deducted off of the card at the next direct deposit.

Emerald Advance (www.hrblock.com/bank/emerald_advance/index.html)—Offered by H&R Block Bank, this service functions as a year-round unsecured line of credit at 36 percent APR and a $45 annual fee. Individuals can repeatedly borrow and repay throughout the year, but the line of credit (up to $1,000) must be paid down each year by February 15. The line of credit is established when a customer establishes direct deposit to an associated prepaid card (H&R Block Emerald Prepaid MasterCard®) or makes a deposit of $300–$1,000 in an associated savings account (H&R Block Emerald Savings account), thereby reducing the APR to 9 percent. The borrower must make a monthly minimum payment amount of $40 or 4 percent of the outstanding balance, whichever is greater, and can pay down their line of credit with a portion of their tax refund.

Short-Term Loans/Line of Credit



13

Fee StructuresTwo pricing models prevail in the industry today. One charges a moderate monthly fee (e.g., $10 a month) and no fee for individual transactions (signature or PIN purchases). The other has a low or no monthly fee and instead charges for certain transactions made using the card. In both of these models, there are often still charges for other transactions (e.g. ATM withdrawals, reloading, etc.). Like card features, prepaid card fees vary a great deal. In addition to monthly and pay-as-you-go pricing models, there are also basic card products with fewer features and lower costs, as well as feature-rich products that often have higher costs. Table 2 shows common fees and their average amounts. Competition and technological innovation have spurred a broad reduction in prices as the industry has matured.

Table 2 – Common Prepaid Card Fees

Fee Type Explanation Range CommentActivation fee Fee to activate your card, a sign-up

or start-up fee$0 / $3 to $10 Usually free only with direct deposit

Monthly fee Maintenance, usage, and other fees charged to your account each month

$0 to $15 Fees may vary with level of usage or be waived for an introductory period.

Fee for point-of-sale (POS) transaction using Personal Identification Number (PIN)

Fee assessed at POS for purchases using your PIN, like a debit card

$0 to $2

Fee for POS transaction using signature

Fee associated with purchases made in stores with a signature, like a credit card

$0 to $1 Often cheaper than PIN POS transactions

ATM withdrawal fee Withdrawing cash from an ATM $0 to $5 May be higher for international withdrawals

Reloading fee Fee charged for adding money to the account where your money is held

$0 to $5 Direct deposit is generally free; to load cash is usually $4–$5 per load.

Balance inquiry fee Fee for information about your available balance

$0 to $3 May vary according to how information is requested. Usually free if checked online, by text message, or through an automated phone system. Balance inquiries at an ATM or with a live customer service agent by phone usually incur a fee.

Monthly statement fee Fee for obtaining monthly transaction history

$0 to $10 Usually free to obtain online; usually there is a charge to have a paper statement mailed to you.

Cancellation/ refund fees

Fee for canceling card before contract end, or requesting a partial refund of money loaded onto the card

Usually no fee, but sometimes upwards of $180

Read contract carefully to determine if these fees apply.

Insufficient funds/overdraft fee

Fee for making a transaction when you have inadequate funds, or for exceeding your limit

$0 to $3 It is typically not possible to overdraft a prepaid card, but it can happen occasionally. Review contract documents carefully for overdraft conditions and charges.

Foreign currency conversion fee

Fee to convert from another currency during international transactions or travel

Up to 2% (usually a percentage of total spent)

Often a convenient way of getting cash in a foreign country; rates usually are better than conventional money exchanges.



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Please note that Table 2 is not comprehensive. Any specific prepaid card agreement may contain fees not listed here. Nonprofits and their clients should review prepaid card agreements (available on the card programs’ website and in printed form in the cards’ packaging) carefully to understand the fees associated with any given card.

How Do Prepaid Cards Compare with Other Payment Products?Although prepaid cards are similar to debit and credit cards in many ways—all three are plastic forms of payment that offer a secure, convenient way to pay for most purchases without carrying cash—prepaid cards differ in the following important respects:

1. Access: Debit and credit cards can be significantly more difficult to obtain than prepaid cards, since they may require more identification, ChexSystems5, or credit checks.

2. Overdraft: Prepaid cards are very difficult to overdraft compared with debit and credit cards, saving consumers who would otherwise incur fees for exceeding credit limits or overdrawing their accounts. Banks often permit debit and credit card transactions to proceed even when there are insufficient funds in the associated account or when consumers exceed their credit limits. In both cases, banks charge overdraft or over-the-limit fees. New rules for overdraft fees go into effect for debit card transactions in late 2010. Previously, consumers were often automatically opted in to overdraft coverage without any notification. Under the new rules, consumers will have to actively opt in if they want overdraft coverage. Prepaid card users, however, will almost always have such transactions declined, allowing them to avoid high overdraft fees. In extremely rare instances, prepaid cards can be overdrawn. However, in such cases there may still be penalty fees unless the consumer is otherwise enrolled in an optional overdraft protection feature, if offered (for more on overdraft protection now offered on a limited number of prepaid cards, see the sidebar on page 16). For instance, if the full value of the transaction was not debited in real time (e.g., on airplanes or at flea markets) or all at once, and other purchases were made in the interim, cardholders may exceed their available funds and face a penalty. Tips at restaurants are often debited after the price of the meal is deducted. Similarly, gas stations often charge an initial one dollar fee when consumers pay at the pump and then deduct the remainder of the transaction later.

Credit building:3. Credit cards offer a way to build credit, as repayment information is commonly reported to the major credit bureaus. The relationship between debit cards and credit building is more complex and varies by product and institution. Transactions and payments made with a debit card are not reported to the credit bureaus. However, the financial institution providing the checking account and debit card may monitor account activity as part of its own internal underwriting system to determine a future credit offer. Prepaid card companies are increasingly using internal data on consumers’ transactions to make credit decisions in a similar fashion. Currently, there are two ways to build credit with a prepaid card: 1) consumers use a short-term loan/line of credit feature (as described in sidebar on page 12), and the card provider reports repayment data to the major credit bureaus; 2) consumers use automatic bill pay, and the card provider reports this activity to an alternative credit bureau such as PRBC, allowing consumers who pay their regular bills on time to establish a record that could be used for future credit or rental applications.

5 The ChexSystems, Inc., network comprises member financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts. For more information about ChexSystems see https://www.consumerdebit.com/consumerinfo/us/en/index.htm.



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Comparison with Other Transactional ProductsPrepaid is first and foremost a transactional product that allows consumers to safely store funds and make purchases, so it is useful to think of prepaid in the context of other transactional accounts and services. Table 3 compares key features and qualities of prepaid cards with those of checking accounts (with debit cards), credit cards, and check cashing.

Table 3 – Prepaid Cards versus Checking Accounts, Credit Cards, and Check Cashing

Product Prepaid card

Checking account with debit card

Check cashing

Credit card

Check cashing Direct deposit free if feasible; otherwise still need to cash check

Direct deposit free, regular check may add delay

Yes No

Pay bills Yes Yes No—must buy money order

Yes

Earns interest Rarely Sometimes No No

Credit check required No Sometimes. ChexSystems check often required.

No Yes

Overdraft protection and fees

Rarely Yes, although regulation may make overdraft less common

No Yes, when credit limits are exceeded

Fees Some combination of monthly fee and some transaction fees

Often no monthly fee, but other fees: for checks, risk of overdraft fees, or minimum balance fees

Fees (can be high) at time of check cashing

Sometimes monthly fee, interest charges, late charges, overdraft charges

Theft protection Yes* Yes No Yes

Credit Sometimes† No No Yes

Builds credit score Yes – Limited** No No Yes

ID requirements - State-issued ID or passport (some cards accept other foreign IDs)

- Social Security number or ITIN*** (not always required because often there is no interest income to report)

-Address

- State-issued ID or passport

- Social Security number or ITIN (not always required)

-Address

Photo identification only

- State-issued ID or passport

-Social Security number

- Address

Minimum balance requirements

No Yes (usually) No No

* MasterCard® and Visa® currently limit consumer theft liability on prepaid cards to $50, but they are not required by law to do so.† Prepaid cards sometimes offer a short-term loan or line of credit (see page 12).** Sometimes cards report payment of regular bills to credit agencies, which can help to build credit.*** ITIN stands for Individual Tax Identification Number.



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A Note About Wage GarnishmentsLike other accounts, funds stored on prepaid cards are subject to garnishment. With a checking or savings account, the garnisher typically must send a subpoena to the financial institution to access account records. With prepaid cards, as the funds are stored in a pooled account, the garnisher must subpoena the card provider rather than the financial institution, which can be more difficult.6

6 See Appleseed’s Understanding Prepaid Card Partnerships: A Guide for Nonprofit Organizations in New York, http://ny.appleseednetwork.org/LinkClick.aspx?fileticket=Ghvb_f7S6fA%3D&tabid=628, 2010.

Increasingly, prepaid card companies offer overdraft protection to their cardholders, allowing them to make purchases or ATM withdrawals for amounts greater than the balance in their card account. Consumers may opt in to this feature, and fees for this service vary. Some programs offer a buffer or an amount (e.g., $10) that users must exceed before a fee is charged. Some programs also offer a grace period, or a window of time during which consumers can address the overdraft before a fee is charged. Nonprofits serve an important role in helping their clients determine whether overdraft protection will be beneficial to them.

Overdraft Protection on Prepaid Cards



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The Prepaid Industry The prepaid industry has grown rapidly in recent years. In 2005, approximately $14.7 billion was loaded onto an estimated 45 million network-branded cards. By 2008, that amount had more than quadrupled to $60.4 billion.7 General purpose, reloadable prepaid cards in particular were used for more than $4 billion in transactions in 2008, and that number is expected to increase to $10.8 billion by 2011. A recent FDIC estimate suggests the growing appeal of prepaid cards: 9.7 percent of U.S. households—including 11.9 percent of unbanked and 16.4 percent of underbanked households—use prepaid cards.8

The prepaid card industry is young, diverse, and growing quickly. A handful of large companies have the most significant market presence—Walmart, H&R Block, Green Dot and NetSpend—but a large number of card program managers make up the rest of the card volume. Some companies in this space offer prepaid cards as their primary line of business, while others offer prepaid as an addition to an established core business, such as Walmart, H&R Block, Western Union, Univision, etc.

Industry StructureProducing a prepaid card, issuing it to customers, and ensuring its proper operation requires collaboration by multiple companies. There are six distinct functions within the industry:

Payment network:1. The networks (Visa®, MasterCard®, Discover®, and American Express®) provide the electronic channels through which transactions occur.

Card issuer:2. The issuing bank or other depository institution that provides the BIN (bank identification number) for the cards and holds the funds stored on the cards.

Fulfillment and transaction processor:3. The processor facilitates fulfillment and shipment of the cards, processes transactions, and tracks and distributes funds held in the issuing financial institution. Sometimes these services are provided by multiple companies; some companies specialize in fulfillment, while others specialize in transaction processing, though many carry out both functions.

Program manager:4. This entity or person provides the customer interface for the prepaid product and handles the marketing and day-to-day operations of a card program. Program managers can provide fulfillment and distribution services, but more often they contract with other companies for these services. Issuers and processors also may act as program managers, but frequently the program manager is a third party.

Loading network:5. Reload networks allow cardholders to add funds to their cards by giving cash to a merchant at a point of sale.

Distributor/Vendor:6. An entity that distributes and markets prepaid cards to consumers.

These six functions come together to reach and serve the customer, as illustrated in Figure 3.

7 Fourth Annual Network Branded Prepaid Card Market Assessment, and Sixth Annual Network Branded Prepaid Card Market Assessment, Mercator Advisory Group, September 2007 and September 2009; and Cardholder Use of General Spending Prepaid Cards, CFSI and Federal Reserve Bank of New York, February 2007.

8 FDIC Survey of Unbanked and Underbanked Households, Tables A-13 and A-14.



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Figure 3 – Industry Supply Chain

Note: The names mentioned in this graphic are examples of companies that serve various functions in the prepaid supply chain. This is not an exhaustive list of all industry players.

Although there are six distinct functions, the lines can blur between the functions because some companies are vertically integrated, meaning they perform more than one function in the supply chain. NetSpend is an example of a vertically integrated company. They fulfill and process their own transactions and manage their own programs, but also market and distribute their cards directly to consumers online and through distribution partners such as check cashers and grocery stores. NetSpend also has its own reload network with more than 100,000 reload locations in the United States. Another example is GreenDot, which serves as a program manager, distributor, and cash reload network.

PAYMENT NETWORKMasterCard® Visa®

CARD ISSuERMetaBank

The Bancorp, Inc.GE Money

FuLFILLMENT & TRANSACTION PROCESSOR

FISFirstData

MT&LFSV Payment Systems

PROGRAM MANAGERAccount Now

GreenDotNetSpendRushCard

DISTRIBuTOR/ MARKETER

ACE Cash ExpressWalgreens

CVS/pharmacyWalmartUnivision

Western Union

LOADING NETWORKSGreenDot Western Union MoneyGram Visa ReadyLink MasterCard rePower



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Economic Overview of the IndustryTo fully educate consumers about prepaid cards and to engage with prepaid card providers, it is important to have a basic understanding of the economics of the industry and how the various players make money.

Prepaid cards are generally a low-margin business, meaning profit makes up a small percentage of revenue. Therefore, a relatively small amount of profit must be divided by all of the parties along the supply chain. In addition, the fixed costs in technology, systems, process, and new program setup are relatively high compared with the variable cost associated with adding each new customer. Primarily, this implies that product volume is important for profitability (Figure 4).

Industry revenue comes from a variety of sources, including:

Card fees (as outlined in Table 2)•

Interchange fees (paid by the merchant to the payment network on each transaction; •averages 2 percent of transaction value)

Float or interest earned on deposits•

Ancillary products such as fees and interest earned from short-term loans/lines of credit•

How the revenue gets divided across all of the players in the supply chain varies by card program.

Figure 4 – Illustrative Cost Structure for Prepaid Card Industry

0 Active Cards

NuMBER OF ACTIVE CARDHOLDERS

$0

$Revenue

PROFIT

Total Costs (Fixed plus Variable)

Fixed Costs (high): Cost to set up systems, relationships, and each card program

Variable Costs (low): New cost per each additional cardholder



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Legal and Regulatory Issues Because of the prepaid card industry’s relative youth, the regulatory system governing prepaid cards is still evolving. Anyone engaged in this space should be aware that regulatory changes may affect product offerings, pricing, features, and consumer protections. Regulators have not yet explicitly extended many important consumer protections such as Regulation E9 and FDIC pass-through insurance to prepaid cards. However, this does not mean these protections are unavailable—indeed most of the major prepaid card providers operate in compliance with these regulations. However, you should carefully screen any product offerings to make sure such protections are included, and advise your clients to do the same.

It is important to evaluate a card’s terms and conditions, in order to make sure that any and all fees are clearly disclosed and that dispute resolution procedures are straightforward. You should also ensure that basic account transaction information is available, such as through electronic statements.

In addition, it is critical to choose a card with FDIC pass-through insurance (which guarantees that each card is insured as an individual account, and its funds are protected in the event that the issuing bank fails). To verify that a card is FDIC insured on a pass-through basis, check with the program manager or card distributor, or contact the issuing bank. To find a card with good terms, fees and resolution procedures, review the disclosures and card contract carefully, and compare multiple card offerings, especially if you intend to refer clients to a specific prepaid card, or distribute cards yourself.

Appendix B contains details on some of the legal and regulatory issues affecting distribution of prepaid cards. Be sure that your contract with a card issuer addresses these concerns and answers them to your satisfaction.

For more information on these and other regulatory issues, please refer to CFSI’s policy brief on prepaid card regulation, forthcoming in late 2010.

9 Regulation E implements the Electronic Fund Transfer Act, which establishes guidelines for account disclosures, error resolution procedures, periodic statement requirements, and more for accounts involving electronic transactions. Payroll card accounts are subject to Regulation E. Most issuers of GPR cards offer Regulation E types of protections to cardholders, in addition to the card brands’ zero-liability policies.



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Benefits and Issues for Consumers10

What does this mean for the people your nonprofit serves each day? It means that prepaid is a potentially beneficial product choice for consumers looking to conduct financial transactions and that you should consider how to best integrate prepaid cards into your organization’s programming. Prepaid cards are increasingly being marketed to and used by consumers as an entree to or a substitute for a traditional checking account. Given the variation in consumers’ financial services needs and preferences, prepaid may not be for everyone. However, for many underbanked consumers, it can be a great option in helping them meet their short-term needs and possibly in achieving longer-term savings and credit-building goals.

To better understand how cardholders view their cards and the benefits cards offer, CFSI conducted in-depth interviews with prepaid card users. The points below summarize the benefits they described.

Reduced cost for financial services: Prepaid cards can reduce the cost of basic financial services for people who have access to direct deposit (either through an employer or government benefit). This is particularly true when the alternative is paying for check-cashing and bill-payment services, or using a checking account and incurring overdraft or insufficient-fund fees. CFSI’s June 2009 paper One Size Does Not Fit All: A Comparison of Monthly Financial Services Spending 11 contains several case studies comparing prepaid card fees to the cost of check cashing or checking accounts. One of these examples is summarized in the sidebar titled Potential Cost Savings with Prepaid (page 23). Using online bill pay, free balance-inquiry methods (text message, online, etc.), and receiving cash back with purchases to avoid ATM fees can also help to keep the costs of the prepaid card low.

Security: Prepaid cards allow consumers to make purchases and pay bills without carrying large amounts of cash.

Immediate liquidity: Funds directly deposited onto prepaid cards are available immediately, making prepaid an appealing tool to consumers who typically use check cashers because they cannot afford to wait for a financial institution to clear a deposit into a checking account.

10 Except where otherwise noted, the findings described in this section are from the study conducted in A Tool for Getting by or Getting Ahead? Consumers’ Views on Prepaid Cards, CFSI with Jennifer Romich and Eric Waithaka, http://www.cfsinnovation.com/topics/article/330566, April 2009.

11 Available at http://www.cfsinnovation.com/publications/article/330606.

“It’s like a weight is being lifted off my shoulders knowing that I don’t have to carry money on me.”‡

“When I used a bank, every time I was turning around I was being charged for this or billed for that. With my prepaid card, there is none of that. I know how much I spend a month to use it, and that’s all there is.”

“I’m deeply grateful for my prepaid card. I can buy online; I can do anything that a person with good credit can do.”

‡ Consumer quotes are excerpts from A Tool for Getting by or Getting Ahead? Consumers’ Views on Prepaid Cards, CFSI with Jennifer Romich and Eric Waithaka, April 2009, and Satisfaction with and Usage of Prepaid Cards, NBPCA/CFSI Survey Results, April 2009.



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Transparency and predictability: Fees for transactions and deposits are charged upfront for prepaid cards. The cards are difficult to overdraft and tend to have fewer back-end charges than checking accounts. Almost three-quarters of prepaid card users say the fees for using their cards are fair, and an even greater percentage say they understand the fees well. These numbers increase even further for consumers who use the cards regularly.12

Convenience: Consumers can make purchases and access funds at any location that accepts the network brand (e.g., Visa® or MasterCard®) and all hours of the day. Prepaid cards allow customers to make purchases and pay bills online.

Accessibility: Many underbanked consumers either do not have, or do not perceive themselves as having, sufficient identification or credit history to open a traditional checking account at a financial institution. Prepaid cards do not require a check of consumers’ files with the credit bureaus or ChexSystems, a reporting agency that catalogs negative bank account actions such as bounced checks and fraud.

Acceptance/Inclusion: Having a card gives customers a way to pay that does not differentiate them from other consumers who may be more financially advantaged. Whereas using a money order is a visible sign of not having a checking account, the prepaid cards act and look like credit or debit cards.

Financial discipline: Prepaid cards help consumers limit spending and stay on budget. People can only spend what they have, so it is hard to overdraft or get into debt.

Build savings: Prepaid cards can help people build savings, particularly if the card has a linked savings account with automated deposit and/or a competitive APY.

12 Satisfaction with and Usage of Prepaid Cards, NBPCA/CFSI Survey Results, http://www.cfsinnovation.com/topics/article/330558, April 2009.

“I rent a car with it, and that’s major.”

“I think it is more socially acceptable to own/use a credit card, and by using a prepaid card I feel more socially acceptable.”

“I primarily use reloadable prepaid cards for items like gas, groceries, and smaller bills like phone or Internet services. It’s easy to place the money into the account during the month and stay within the confines of the budget I have allotted to spend for these goods and services.”

“I’m not a bank or credit card type of person. Reloadable prepaid cards give me the ability to make purchases.”



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Ms. J. receives income from six checks each month—two from government benefits programs and four from her employer—totaling about $1,700. She pays her rent in cash; pays bills for her phone, cable, and car insurance; and makes about five additional monthly purchases for eating out and groceries.

As shown in the following table, switching from check cashing and money orders to a prepaid card with direct deposit for could save Ms. J. $20 a month on average. While a checking account could save her an additional $13, these savings depend on several factors; if Ms. J. made more ATM withdrawals, expedited a bill payment, or incurred an insufficient funds charge, it could wipe out those savings entirely.13

13 For more comparison of Ms. J’s options, and for other financial services cost comparisons, see One Size Does Not Fit All: A Comparison of Monthly Financial Services Spending, http://www.cfsinnovation.com/publications/article/330606, June 2009.

Potential Cost Savings with Prepaid

Check Cashing Prepaid Checking AccountServices Average Cost

Six Checks Cashed 51.45

Three Money Orders 4.50

Services Average Cost

Two Direct Deposits 0.00

Four Checks Loaded 21.85

Cash Withdrawal 4.50 (Rent Payment)

Three Bill Payments 1.50

Eating Out and Groceries 2.50

Monthly Fee 6.48

Services Average Cost

Six Deposits 0.00

3-6 ATM Fees, plus 3 Checks 23.90

Total Before Fees $23 .90

Expedited Bill Pay 9.50

Insufficient Funds 19.00

Total $55 .95 Total $36 .83 Total With Fees $52 .40


Now that you have a strong working knowledge of prepaid cards, it is time to turn our attention to opportunities for nonprofit organizations to incorporate prepaid cards into their programming.

The Engagement Continuum

Nonprofits can choose from a continuum of options on engaging with the prepaid industry, as illustrated in Figure 5. The options range from providing information and education about prepaid cards to operating an independent financial services business with prepaid as just one part of a broader product suite. The options fall into four main categories:

1. Information and education: Provide general information about prepaid card products; incorporate prepaid into financial education curriculum or counseling programming.

2. Partnership and referral: Refer clients directly to specific product(s) available in the marketplace; develop a formal partnership with a prepaid provider to refer clients.

Distribution:3. Partner with a prepaid card provider to become a distributing agent of the product.

4. Service provision: Provide a suite of financial products and services that reaches beyond prepaid cards. This might entail becoming a prepaid card program manager, operating a money services business or starting your own financial institution. This category of options is beyond the scope of this guide.

These categories increase in complexity as you move from left to right across the continuum.

How your organization ultimately engages with prepaid will depend on its mission, core competencies, capacity, and interests. No single option fits every organization.

Part II: Opportunities For Nonprofits To Engage With Prepaid

Figure 5 – Continuum of Prepaid Engagement

Answer basic

questions about

products

Provide information

and educate clients about

products

Direct clients to specific

product(s)

Develop partnership to formally connect

clients and providers1

Distribute prepaid cards2

Own and operate financial services

business3

Degree of Intensity

Information and Education

Referral and Partnership Distribution Service

Provision

1. “ Develop partnership…” includes helping with outreach and providing customer follow-up, while the provider delivers the product.2. “ Distribute prepaid cards” includes the full process from marketing to enrollment to ongoing customer service. 3. “ Own and operate financial services business” includes distributing prepaid cards as part of a broader product suite.


PART II: OPPORTUNITIES FOR NONPROFITS TO ENGAGE WITH PREPAID

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This guide is designed to present a range of options and a series of critical questions and issues that will assist you in deciding the best approach for your individual organization. Choosing the proper approach is not a science, and the best course of action may not be readily apparent. CFSI recommends comparing several options against your organizational realities and to err on the side of conservatism in terms of your capabilities and expectations. Below is a list of key strategic questions to consider and discuss across your organization before you select an engagement approach.

Key Considerations in Choosing an Engagement StrategyWhat is your organization’s mission? If your organization’s mission involves promoting financial inclusion and helping consumers achieve financial prosperity (or something closely related), engaging with prepaid cards likely makes sense. Otherwise, getting too involved with prepaid might result in mission drift and unsatisfactory outcomes.

What are your organization’s core strengths and competencies? Does prepaid directly tie in, or is it a logical enhancement to your pre-existing programming? If your core strength is education, it may make sense to limit your involvement with prepaid to providing information, education, and referrals. To be successful with the more advanced options, consumer financial services should be a main focus and core competency of your organization. In particular, if you are considering distribution, we recommend past experience with marketing and outreach, building and maintaining for-profit partnerships, and delivering financial products. Therefore, we expect distribution to be the best approach for only a limited number of organizations.

What are the specific financial services needs (immediate and longer-term) of the populations you serve, and does prepaid help meet those needs? Before you settle on an engagement strategy, it is critical that you develop a firm understanding (possibly through focus groups, interviews, or surveys) of your clients’ financial services needs, preferences, and behaviors. Otherwise, you could offer or refer them to a product that provides little value. CFSI’s research has shown that prepaid cards seem to especially appeal to and work well for consumers who have direct deposit, previous experience with account-based products, a stable income and housing situation, and comfort using the Internet. Clients without these characteristics may find little value in a prepaid card. The worker center case study in Appendix A describes one nonprofit’s experience conducting a customer segmentation analysis.

Is integrating prepaid into your organization’s programming a priority for your organization? Is there buy-in for this effort among the board, senior management, and staff? You need a high level of enthusiasm and a long-term commitment to make whatever option you choose a success, especially if you choose distribution. Ideally, you would have a prepaid “champion” or project leader tasked with ensuring your organization is successful with whatever approach you take.



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How much capacity does your organization have to take on this effort? The further to the right on the continuum you move, the more organizational capacity you will need to successfully incorporate prepaid into your programming. For instance, adding prepaid to your financial education curriculum will likely require only the upfront investment of staff time to learn about the product and to update lesson plans. However, if you choose to actively partner with a prepaid provider to do outreach and marketing or to distribute cards, capacity demands increase significantly. CFSI’s experience suggests that you need at least one to two full-time staff members for a successful launch and maintenance of a distribution program.

What financial resources do you have to devote to this effort? What are your expectations around financial sustainability? As you move from left to right across the continuum, the options require more financial resources. Providing information or educating clients about prepaid may not require hiring additional staff, but an active partnership or card distribution program will, thereby increasing your organizational expenses. Nonprofits sometimes see engagement in prepaid as a path to financial diversification and sustainability. We recommend caution with this line of thinking. It is unlikely that there will be funding available beyond traditional foundation or government grant support for efforts to inform or educate consumers about prepaid. Similarly, if your organization wants to distribute prepaid cards as a social venture, you should look closely at revenue generation and the true cost of operating the program. To make the project self-sustaining, you would need to negotiate revenue sharing with the prepaid card provider and then enroll and keep active thousands of cardholders—an unfeasible undertaking for many small to midsize organizations. We suggest you make conservative assumptions when planning, strive for sustainability in your business model, and approach card distribution as a source of long-term benefit rather than short-term profit. A partnership and referral approach may offer an opportunity to earn a commission from the card provider for client referrals. Providers commonly pay other companies for customer referrals or spend money directly on customer acquisitions themselves (costs often range from $50 to $250 per new acquired customer). It may be possible to negotiate a fee for each new active customer you deliver to help offset your costs.



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Levels of Engagement with Prepaid Cards

The next section provides details on the levels of engagement and tips for succeeding with each option.

Information and EducationThis option might be a good fit for your organization if:

The mission is tied to consumer financial services.•

Financial education, counseling or coaching is your core competency.•

You have limited financial resources or capacity to devote to the effort.•

You clients have diverse financial service needs and preferences, but you believe prepaid •could be a useful product for a segment of them.

Examples of the types of nonprofit organizations that might be well-suited for this option:

A nonprofit organization that provides financial education introduces prepaid cards as an •alternative to checking accounts in the training curriculum.

A nonprofit social service agency with a broad mission is prepared to answer client questions •and to provide basic information about the product.

Description:A nonprofit organization working in consumer financial services, asset building, financial education or a related field should have a basic understanding of prepaid in order to respond to clients’ questions as prepaid cards become more prevalent in the marketplace. Be prepared to answer basic questions such as: Where can I get a card? How much does a prepaid card cost? How do I use it? How can I reload it? Nonprofits have choices about how much information they provide and how deeply they educate their constituents on this issue.

Organizations that provide financial education or individual financial counseling or coaching should incorporate information about prepaid cards into their curriculum or programming. This should include how the cards work, fee structures, how to compare cards, and help in assessing the product’s benefits given the client’s needs and preferences. If the client goes on to purchase a card, you should help cardholders maximize the benefits of the chosen product(s). For example, you might help them in accessing their accounts online to check balances, monitor fees, pay bills, etc.



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Tips for success with information and education: Know your client and focus your program accordingly:1. Understand clients’ specific needs and concerns, and focus your informational and educational subject matter accordingly. Relevant information will better position you to capture people’s attention and motivate them to change their behaviors. For instance, if most of your clients have never had a transactional account and currently use check cashers, you may need to spend more time stressing the benefits of having an account (e.g., safety, security, possible cost savings over check cashers, etc.).

Provide interactive materials:2. Worksheets and online comparison tools will help clients decide if a prepaid card is right for them and allow them to compare features and fees between cards.

Follow up with clients and provide ongoing support:3. Check in with clients who have received information to see if they have enrolled, how they are using the card and what additional details they need. This will create accountability for cardholders, provide valuable feedback for your program and allow you to track the results of your efforts.

Do your homework:4. Keep current with developments in the prepaid industry, including the most common products in your community, the range of fees, new features, etc.



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Referral and PartnershipThis option might be a good fit for your organization if:

Prepaid cards align with the needs of a significant number of your clients.•

You want to make your financial education programming actionable, resulting in behavior •change and increased knowledge.

You have a moderate level of resources to devote to the project.•

Consumer financial services are a key focus area for your organization. •

Marketing, outreach, and partnership development are core strengths of your organization. •

Examples of the types of nonprofit organizations that might be well-suited for this option: A nonprofit that already refers clients to low-cost checking accounts and wants to add low-cost •prepaid cards to the list of recommended products.

A nonprofit credit counseling agency that seeks an alternative payment product and budgeting •tool for consumers who have encountered trouble with credit cards.

A nonprofit affordable housing provider that seeks a more efficient way to collect rental •payments from unbanked clients, while simultaneously promoting residents’ financial stability. Such an organization might be well-suited for distribution, depending on its core competencies, financial resources, and capacity.

A nonprofit workforce development organization that seeks a method for its clients to receive •direct deposit of paychecks, which many (potential) employers prefer.

A nonprofit domestic violence agency that seeks a quick method to provide abused women •access to emergency cash.



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Description:Nonprofit organizations whose clients could benefit from prepaid cards might consider making referrals to a particular product or set of products with an appropriate combination of low fees, security, transparency and features. They could also formally partner with one or more prepaid card providers to assist with product marketing, customer acquisition, and ongoing service and support. There are many different partnership models. Roles and responsibilities between the nonprofit and the card provider will depend on the partners’ core competencies and capacity.

If your organization already provides financial education, counseling, or coaching, CFSI recommends you consider the referral or partnership option, as it could be a logical addition to existing services. Our research and experience suggest that financial education will be most effective if it is closely coupled with access to financial products and services, so that clients can more easily put knowledge into practice.14 Directly combining access to a financial product such as a prepaid card with education makes it more likely that you will spur positive behavior changes and see improved financial outcomes among your clients. Pursuing the referral/partnership option versus the distribution option also allows you to remain focused on your core competency—education—rather than overextending yourself into areas where you lack experience and expertise. You can rely on your prepaid card provider partner to do what they do best—namely, delivering a card product.

Increasingly, prepaid card providers are interested and willing to partner with nonprofit organizations. Many providers understand that there is a general lack of awareness and understanding around prepaid cards, and they are looking to expand their reach. Nonprofits can potentially be helpful on both fronts. It is important in the partner engagement process that you sell your organization and the additional value you can offer to the provider’s business. Often, this involves assisting the provider in acquiring new customers and providing ongoing customer education and service. Industry also increasingly recognizes the important role of nonprofits in shaping public discourse and opinion about the product. Accordingly, they embrace nonprofits as prepaid champions, promoting cards among potential users and policy makers.

14 CFSI recently completed research to assess the current financial education landscape and determine the types of educational efforts that are most effective in changing behaviors and improving financial outcomes for underserved consumers. CFSI found that the most effective interventions are those that are immediately relevant to consumers’ lives, coincide with key life events or moments of financial decision, allow them to execute newly gained knowledge into action immediately, and help consumers acquire and preserve assets over the course of their lives. To read the complete findings see From Financial Education to Financial Capability: Opportunities for Innovation, http://cfsinnovation.com/publications/article/440486.



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Tips for success with referral and partnership: Know your client:1. You should have a close read on your clients’ financial services needs and preferences in order to refer them to the appropriate product(s).

2. Develop the ability to effectively assess and screen prepaid products: Before you refer clients to a prepaid product(s), it is essential that you vet the products. You do not want to refer clients to a product that will ultimately end up costing more or is of little or no value to them. This requires someone on your staff to become highly knowledgeable about prepaid cards. Staff can select products that meet clients’ needs in a convenient and cost-effective way, and also provide them with savings and credit-building opportunities. Nonprofits must decide how many card products they want to recommend and the exclusivity of a partnership they are willing to enter. For instance, you could establish criteria and develop a resource list including all of the prepaid products available in your community that meet those standards. You could then provide as much guidance as needed for clients selecting a product. Alternatively, you could select one prepaid card provider and enter into an exclusive partnership to endorse a single product.

Select a strong partner and set clear roles, responsibilities, and expectations for the 3. partnership: If you choose the partnership option, it is essential to find a partner who shares your understanding of your clients’ needs and is committed to serving those needs. (For more details on partner selection, see distribution section, page 32 and Appendix C.) You should clearly define responsibilities and expectations at the outset to avoid future problems. Clarify your role in product marketing, client acquisition, enrollment, and ongoing customer service and support. Finally, agree on what the prepaid card partner is willing to provide in return. In some cases, this might involve a financial contribution or revenue- and data-sharing arrangements.

Secure a written agreement about data sharing:4. For nonprofits interested in tracking outcomes and assisting clients in successfully managing financial products, data sharing is essential. Clients can authorize nonprofits’ access to their account information to monitor detailed transactional data and how clients use their cards. This allows you to assist clients that run into trouble or provide encouragement and information about future opportunities to clients who stay on track. Because prepaid card companies can be reluctant to share information, you should emphasize the value you add and the ways in which you can help your clients become their top customers.



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DistributionThis option might be a good fit for your organization if:

Prepaid is a strong fit for a large enough number of your clients to justify your investment •of time and resources.

Consumer financial services are central to your organization’s mission, and you are committed •to including a prepaid card program.

You have strong leadership and sufficient capacity, financial resources, and physical space •to successfully launch the initiative.

Your organization is known by clients as a place to address financial issues.•

You have a strong business sense, are savvy about the prepaid card industry, and have past •experience with marketing, delivering, and servicing consumer financial products.

You are patient, comfortable taking risks, and effective in managing nonprofit/for-profit •relationships.

You have a commitment to customer tracking and follow-up.•

Examples of the types of nonprofit organizations that might be well-suited for this option: A nonprofit tax preparer looking for product solutions to help unbanked consumers receive •electronic refunds. (See the VITA case study in Appendix A for a real-world example.)

A nonprofit lender looking for an entry product for unbanked clients that they must turn •down for loans.

A union with a large membership that seeks to provide a useful transaction product both •to promote financial prosperity and facilitate dues collection.

Description:The prepaid card industry uses many different channels to market and distribute cards to consumers—the Internet, banks, employers, retailers, and direct sales. A few nonprofit organizations have also begun serving as distributors of prepaid cards. Distribution is a major commitment, but some organizations may decide that it complements their existing programs and services and will enhance their ability to achieve their missions.



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ClientKnow your clients!

Understand their needs, and the potential size of the market for your card.

OrganizationDistribution should fit with your core competencies,

align well with your mission, and be a high priority for senior management and

key team members.

Product Partner

Pick a strong partner with realistic expectations for product volume, a long time

horizon, and an excellent product.

Card offering that meets

clients’ needs

Realistic organizational approach that meets clients’

needs

Shared expectations, understanding of roles and

responsibilities

A successful card offering requires a deep understanding of your clients, the capabilities of your organization, and a strong product partner, as illustrated in Figure 6.

Figure 6 – Requirements for a Successful Card Offering



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Tips for success with distribution:Distribution requires more intense effort and commitment, more resources, and broader and deeper competencies than the previous two options. Therefore, CFSI recommends this approach for a limited number of nonprofit organizations that are truly well-suited for this type of work.

Know your client:1. To be successful with distribution, it is essential that you fully understand your clients’ financial services needs, practices and preferences; and that you select a prepaid card product with the fees and features that will appeal to the majority of your client base. For the effort to be self-sustaining, most nonprofits would need to enroll and maintain thousands of active cardholders.

Select a strong product partner:2. Because operational problems are to be expected, seek out a partner you can count on to execute your agreement faithfully—one that has patience and will remain over the long term. Be sure you and your product partner are aligned on the needs of your clients. You should share common and realistic expectations of product volume and financial benefit to each party. Establish a clear understanding of responsibilities on customer service and client problem-solving, so staff time is not consumed with problems that only the program manager can address. Appendix C provides more details on desired characteristics of a prepaid card partner, as well as various processes you can use to identify a partner. Be prepared to clearly articulate the value you can add to a company’s bottom line (e.g., reducing marketing costs, customer acquisition, and customer education and support costs). Additionally, as prepaid is a scale business, you will likely have more success engaging a product partner if you can produce a significant volume of new cardholders (i.e., thousands if not tens of thousands). If your organization cannot singlehandedly achieve such numbers, we encourage you to think about joining efforts with other nonprofit organizations to aggregate the volume.

Be vigilant in your contract negotiations with your selected partner and engage legal counsel 3. for advice in the process: Be mindful of what your partner says they “can” or “will” do as compared with what they are currently doing. Get written commitments of what the partner will provide in terms of the product offering, data sharing, staff training, marketing materials, technical support, customer service, etc. Becoming a distributing agent for a financial product requires you to abide by state and federal laws and financial services industry regulations. Appendix B provides more detail on the types of legal and regulatory issues you are likely to encounter. It is imperative that you work closely with an attorney if you decide to enter your own arrangement with a prepaid card provider to distribute cards.15

Avoid product customizations:4. Nonprofits often desire customizations to the product offerings currently available in the marketplace, such as reduced fees, co-branding, proprietary cash-loading networks, etc. Although you might feel such customizations are necessary to meet the needs of your clients, it is likely that they could increase costs, cause operational challenges, and possibly create confusion.

Educate and engage staff with the card:5. Your staff will be better able to sell cards if they have hands-on experience with the product. Consider paying part or all of employee salaries via direct deposit onto the product. Designate a “card expert”—a go-to person for more complex questions from staff and clients. Additionally, consider providing your staff with incentives for registering card users, but be sure to link success metrics to card usage and retention.

15 The nonprofit social justice organization Appleseed’s report Understanding Prepaid Card Partnerships: A Guide for Nonprofit Organizations in New York provides information on the potential compliance responsibilities nonprofits might face when partnering with prepaid card providers, as well as considerations when negotiating a contract. See http://ny.appleseednetwork.org/LinkClick.aspx?fileticket=Ghvb_f7S6fA%3D&tabid=628, pages 20-29.



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Resolve operational issues early: 6. Have your staff test the product to make sure it functions as anticipated. Your organization’s reputation depends on satisfaction with the card. You’ll need the ability to enroll customers easily and efficiently, deliver cards consistently and provide strong customer service.

Promote direct deposit:7. Prepaid cards are often more useful, convenient, and affordable for those who use direct deposit. Incentives such as reduced or waived fees can help motivate clients to take action.

Be patient:8. It can take multiple interactions with clients to educate them about the product before they are ready to enroll. Develop a strong system for client tracking and follow-up to improve efficiency during what can sometimes be a long and frustrating engagement process.


We hope this guide provides an improved understanding of prepaid cards and the ways nonprofit organizations can help connect underbanked consumers to this useful financial product. In the coming years, an increasing number of nonprofit organizations will inform and educate consumers as awareness grows and prepaid cards become more popular. CFSI also believes that a large number of organizations are in an excellent position to refer or connect consumers directly to products to make education actionable and more effective. And for a much smaller subset of organizations, we hope to see stronger and more successful distribution programs. Ultimately, we hope this guide will be a valuable resource to nonprofits and that they will use the information to promote the financial capability and prosperity of underbanked consumers.

Conclusion


understanding Clients’ Financial Services Needs

Beginning in 2008, a national group of immigrant worker centers led by the Center for Community Change in Washington, D.C., joined together to offer a prepaid card to their members. Prior to launching the card, the centers used surveys and interviews to gauge their clients’ interest in prepaid cards. Many clients expressed interest, particularly around the idea of having a Visa® or MasterCard®-branded card product to conduct financial transactions. However, once the worker centers began distributing cards, member interest and enrollments were far below their projections. The worker centers then did a more detailed customer segmentation analysis to better understand the misalignment. The results are illustrated in Figure 7 on the next page.

Ultimately, the worker centers discovered that while the majority of their clients expressed interest in the cards in theory, the reality of their financial situations dictated that they were unlikely to derive tangible benefit from the prepaid product. Consequently they never signed up, or if they did, they never became active users. In most cases, this was due to users’ extremely low incomes and the instability of their work and living situations. This example demonstrates the importance of a deep understanding of your clients’ financial services needs, preferences, and current behaviors.16

16 The Worker Center Collaborative’s experience provides several other valuable lessons as it relates to nonprofit distribution of prepaid cards, detailed in the CFSI Learning Brief, Alliance to Develop Power’s Worker Center Collaborative, http://cfsinnovation.com/system/files/ADP%20Learning%20Brief%20Final%2011-30-09.pdf

Appendix A: Case Studies


APPENDIx A: CASE STUDIES

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uNEMPLOYED AND HOMELESS

Income: Extremely Low <$6,000 Annual

No Access to Direct Deposit

DAY LABORER IN SHELTERS OR WITH FRIENDS

Income: Very Low $5-10,000 Annual

No Access to Direct Deposit

STABLE WORKER PAID, IN CASH OR CHECK, SHARED RENT

Income: Low $10-15,000 Annual

Unlikely to have access to Direct Deposit

PERMANENT JOB PAID BY PAYROLL CHECK, PAYS LEASE


Likely to have access to Direct Deposit

PERMANENT JOB PAID BY PAYROLL CHECK, PAYS LEASE


Likely to have access to Direct Deposit

MEMBER PROFILE

BANKING SEGMENTATION

“BANKING” NEEDS

PROGRESSION

underbanked Deposit Account Only

unbanked/Previously Banked u .S . Born

unbanked/Never Banked Recent Immigrant

Savings, Bill Pay, Direct Deposit(Reloadable Debit Card)

“unbanked” Add on Products(Auto Insurance, Tax Prep, Pay Day Loan)

“unbanked” Cash Transactions(Check Cashing, Money Orders, Remittance, Bill Payment, Phone Cards)

Education & Access

Education & Access

Did not derive tangible benefit from the reloadable debit card

Likely to derive tangible benefit from the reloadable debit card

Figure 7 – Worker Center Customer Segmentation/Financial Needs Progression

The segmentation analysis organizes worker center clients along a spectrum of income and financial sophistication.


APPENDIx A: CASE STUDIES

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One Nonprofit’s Distribution Experience

Prepaid cards represent a compelling opportunity for nonprofit organizations that provide free tax-preparation services (Volunteer Income Tax Assistance or VITA) to low-income tax filers. Direct depositing onto a prepaid card expedites the receipt of income tax refunds while giving unbanked or underbanked taxpayers a lasting financial tool to avoid check-cashing fees and to conduct transactions year-round. For-profit tax preparers such as H&R Block and Jackson Hewitt have identified this strong value proposition and have issued millions of prepaid cards.

Recognizing the need and opportunity, the Rochester, N.Y.-based Empire Justice Center/CASH Coalition began offering a prepaid card in partnership with Community Financial Resources. The staff at major CASH sites includes an asset specialist, a member with detailed knowledge about the prepaid card offering, which has been an important part of CASH’s success to date. In the past two years, CASH has issued more than 750 cards to its clients, and early data suggest that 35–40% of those clients sign up for ongoing direct deposit of paychecks. However, the effort to distribute cards has encountered some challenges. CASH had initial difficulty finding a product partner with a straightforward, affordable card offering and informative marketing and educational materials. It also had too few asset specialists at the outset to cover all of its sites. CASH is now working to increase the percentage of cardholders that use direct deposit and determine how they can encourage year-round card usage, as client interactions are currently limited to the tax season.


Legal and Regulatory Issues that Impact Nonprofit Prepaid Card Distribution

If your organization decides to distribute prepaid cards, you must comply with relevant state and federal banking and anti-money laundering laws. You will most likely contract with commercial entities to issue and process cards. The contract should delineate which party is responsible for licensing, insurance, risk management, security, recordkeeping, and compliance with the applicable laws and regulations. It is essential to work with an attorney who understands the industry as you negotiate your contract, and to ensure legal and regulatory compliance.

Some of the key issues that you might encounter are summarized below:

Identification documents:1. The Know Your Customer section of the USA Patriot Act requires that financial institutions verify the identities of their customers. A nonprofit acting as an agent of a prepaid card company will need to undertake this responsibility, which includes collecting and storing the identification documents. Some banks are more flexible in the types of documentation they will accept to verify an identity, and if flexibility is a consideration for the target population, it is important to find a bank that accommodates this. Also, it is critical to know what data must be stored, and by whom; if the data is considered disclosable and if so, what can be disclosed and by whom.

Privacy:2. As bank products, GPR cards are subject to the privacy and security requirements of the Gramm-Leach-Bliley Act (GLBA), as well as the Payment Card Industry Data Security Standards. To the extent a nonprofit possesses any nonpublic information about a cardholder, the nonprofit must comply with the privacy and security requirements of the GLBA.

MSB licenses:3. Non-bank financial services entities, or money services businesses (MSBs) include remittance companies, cash-loading sites, money order issuers, and check cashers. MSBs are regulated at both the federal and state level. The rules vary by state, but an entity that intends to accept cash for reloading may need an MSB license for the state in which it will operate. At the federal level, MSBs must register and report certain suspicious activities. MSBs must maintain an anti-money-laundering program that includes, at minimum, verifying customer identification. A partnership or a business contract with an MSB may entail certain legal requirements to ensure compliance with federal and state MSB laws.

Other licenses:4. The nonprofit or card provider needs any licensing required by law, such as a money transmitter license or a bond to pay any claims in case of insolvency. If the nonprofit acts as an agent of the card issuer by providing certain services, such as opening accounts, accepting funds and payments, and loading cards, then the licensing requirements likely apply to the nonprofit.

Recordkeeping:5. Certain relationships with card issuers may trigger recordkeeping requirements and reporting. This relates to the privacy issue addressed in #2 above.

Tax-exempt status:6. It is important that a prepaid card program will not jeopardize the nonprofit’s tax-exempt status. Seek legal assistance to ensure prepaid card activities are not subject to Unrelated Business Income Tax.

7. Fraud prevention: The nonprofit will need written policies and procedures designed to safeguard confidential client information.

Appendix B: Legal and Regulatory Issues


Selecting a Prepaid Card Provider Partner

As described in the Distribution section, it is essential that you select a strong prepaid card provider partner to be successful. This appendix provides the characteristics that CFSI suggests you look for in a partner, as well as various paths you can take to identify potential partners.

Desired Characteristics 1. Experience: Look for a vendor that has been in operation for at least two years (ideally more) and a proven track record in providing a high-quality product to satisfied customers.

Financial stability:2. The majority of prepaid debit card vendors are not publicly traded companies, and those that are usually exist as a segment of a much larger business. If it is not publicly traded, sign a non-disclosure agreement and ask the company for audited financial statements. Look for a positive cash flow and strong financial position.

Commitment to prepaid cards:3. A company in which prepaid cards are a core part of its business strategy is more likely to stay committed to the product and the partnership. It is an advantage if your partner already offers a product with features that align with your clients’ needs, because it likely means less need for customization.

Size:4. If the vendor is too large relative to your project, you run the risk of being insignificant to that vendor. If the vendor is too small, it may not have the resources you need and may run the risk of going out of business.

Cost:5. Factor in both the price of the product for consumers as well as the amount of revenue share you will get as an organization. There is an inherent trade-off here. The lower the prices for consumers, the less revenue the card generates.

How to Identify a Prepaid Product ProviderThere are three primary paths you can take to identify a product provider:

Issue a request for proposals (RFP):1. An RFP can be costly and time-consuming, but it may be worthwhile if you expect to generate a large volume of cardholders (i.e., tens of thousands at a minimum). With an RFP based on clear, objective criteria, you can compare potential partners and perhaps cause them to compete for your business.

Form an alliance with other nonprofits:2. You can join efforts with other nonprofits that are already offering prepaid cards. For instance, through the Aspen Institute’s AssetPlatform (http://assetplatform.org), nonprofits can offer their clients a prepaid card provided by the nonprofit program manager Community Financial Resources (CFR).

Select and individually approach a small number of prepaid card providers:3. This approach requires you to do your homework and to identify firms that ideally have a proven track record or a keen interest in working with nonprofits. Consider talking with program managers that aggregate smaller nonprofits to reach a sustainable volume. For instance, program managers such as ADVENT Affordable Financial Solutions focus on aggregating prepaid volume from nonprofit Volunteer Income Tax Assistance (VITA) sites across the country.

Your capacity for screening and negotiating contracts with product partners as well as your anticipated volume will ultimately determine the best partner identification approach.

Appendix C: Selecting a Partner

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312.881.5856 www.cfsinnovation.com

©2010 | CENTER FOR FINANCIAL SERVICES INNOVATION

About CFSI

The Center for Financial Services Innovation is the nation’s leading authority on financial services for underbanked consumers. Since 2004, its programs have focused on informing, connecting, and investing—gathering enhanced intelligence, brokering, and supporting productive industry relationships, and fostering best-in-class products and strategies. CFSI works with leaders and innovators in the business, government, and nonprofit sectors to transform the financial services landscape. For more on CFSI, go to www.cfsinnovation.com.

About the Sponsors

NetSpend CorporationAustin-based NetSpend Corporation, a pioneer in card-based alternative financial services since 1999, is one of the only companies in the country with a stated mission to develop products and services that help the millions of underbanked consumers in the U.S. manage their finances, save time and money, and ultimately become “self-banked.” All NetSpend products are FDIC insured and issued by federally regulated financial institutions. More information on NetSpend can be found at their website, www.netspend.com, or by following the company on Twitter or Facebook.

NBPCAThe Network Branded Prepaid Card Association (NBPCA) is a group of diverse organizations that combine to deliver network branded prepaid cards to consumers, businesses, and government. A nonprofit trade association, the NBPCA promotes education and collaboration with government, media, and consumers. It also works with members to establish and encourage best practices to benefit card users and industry participants. The NBPCA’s members include financial institutions, card organizations, processors, program managers, marketing and incentive companies, card distributors, law firms, and media. More information about NBPCA and prepaid cards can be found at www.nbpca.com.

The Annie E . Casey FoundationThe Annie E. Casey Foundation is a private charitable organization dedicated to helping build better futures for disadvantaged children in the United States. It was established in 1948 by Jim Casey, one of the founders of UPS, and his siblings, who named the Foundation in honor of their mother. The primary mission of the Foundation is to foster public policies, human-service reforms, and community supports that more effectively meet the needs of today’s vulnerable children and families. In pursuit of this goal, the Foundation makes grants that help states, cities, and neighborhoods fashion more innovative, cost-effective responses to these needs. For more information, visit the Foundation’s website at www.aecf.org.

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CFSI Nonprofit Guide to Prepaid Cards

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