Fed: Government Prepaid Payments Topped $142 billion in 2013 (July 28, 2014)
Government-funded prepaid cards continue to grow steadily, with agencies at the U.S. federal, state and local levels using prepaid to disburse benefit funds, tax refunds and other payments. Earlier this month, the Federal Reserve Board of Governors released its latest annual report on the sector, which canvassed more than 100 government offices and 14 prepaid card issuers, collectively representing hundreds of programs, to collect data on government-funded prepaid payments made in 2013.
Among the report’s key findings were:
- In 2013, government offices distributed $1.054 trillion to recipients, of which $142 billion, or 13.5 percent, was loaded onto prepaid cards. That’s up slightly from 2012, when 13.0 percent of government payments were made to prepaid cards.
- The prevalence of prepaid varied among government payment types. At the high end, prepaid accounted for 100 percent of all payments under SNAP (formerly Food Stamps), which mandates prepaid cards, and 92.4 percent of Temporary Assistance for Needy Families (TANF) payments. In the middle was unemployment benefits, at 59.5 percent. And, just 3.2 percent of Social Security payments were made via prepaid.
- Issuers of government-funded prepaid cards reported collecting $502 million in revenue from those programs. Of that total, interchange fees accounted for $327 million, or 65 percent, while cardholder fees comprised the remaining $175 million, or 35 percent.
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