Pitchbook US template

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Stored Value / Prepaid Debit Cards
J P M O R G A N   E L E C T R O N I C 
 F I N A N C I A L   S E R V I C E S 20th
Anniversity GTOT Winter Seminar San Antonio,
Texas December 11, 2007 Jan
Konigsberg Garry Hamilton
S T R I C T L Y   P R I V A T E   A N D 
 C O N F I D E N T I A L
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Agenda

• Card Transaction Growth
• Benefits Payer - Recipients
• Types of Cards
• Types of Programs
• Cardholders Features
• Cardholder Surveys
• Consumer Protection
• Use during Disaster Recovery
• Lessons Learned

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The Growth of Prepaid Debit Cards for Mainstream
Financial Access

• Growing consumer market acceptance for prepaid
  cards
• Overcomes barriers to agencies efforts to
  increase direct deposit, primarily lack of bank
  accounts by some recipients

Data source ATM Debit News, EFT Data Book
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Debit Card Services Help Payment Recipients
Realize the Benefits of Direct Deposit

• Mainstream financial services for recipients
  without bank accounts
• All enrollees will be accepted
• Results in cost savings to government agencies
• Improves services for payment recipients

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Advantages for Government Agencies

• No cost to the agencies
• Eliminates costs associated with issuing payments
  by paper checks
• Allows agencies to fully convert to ACH payments
• Improves services to payment recipients
• Card issuer assumes responsibilities for
  escheatment of funds

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Advantages for Payment Recipients

• No monthly service fees to cardholders with
  alternatives for accessing funds without paying
  fees
• The prestige of a branded card
• Recipients use funds as needed rather than check
  cashing and carrying money
• Check cashing difficulties eliminated
• Eliminates mail time - payments received quicker

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Types of Card
Standard and Custom Card Designs
Branded Non-Branded
Specific Benefit
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Government Payment Programs Direct Payment Card

• State, County, and Municipal disbursements of
  consumer-owned funds to recipients who do not
  have checking accounts.
• Applications
• Child Support
• Unemployment Insurance
• Home Energy Assistance
• Workers Compensation
• Characteristics
• Branded Card - VISA
• Consumer-owned funds
• Standard ACH funding
• Account-based, FDIC-insured
• Batch enrollment and updates
• Complete customer service
• Web administrative system

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Government Payroll Programs Payroll Card

• Federal, State, County and Municipal payroll
  disbursement of consumer-owned funds to
  recipients who do not have checking accounts.
• Applications
• Federal, State, County, Municipal government
  payroll
• Union payroll
• Characteristics
• Branded card -VISA
• Consumer-owned funds
• Standard ACH funding
• Account-based, FDIC-insured
• Batch enrollment and updates
• Complete customer service
• Web administrative system

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Single Use Card Cash Card

• Focused on situations where funds are loaded to a
  card issued over-the-counter. Corporate or
  consumer-owned funds. Non-account based with
  limited customer service.
• Applications
• Dept of Corrections payments
• Termination pay
• Disaster Relief
• Home Energy Assistance
• Election worker pay
• Jury service
• Expense reimbursement
• Temporary Relocation
• Characteristics
• Standard non-branded card
• Consumer or corporate-owned funds
• Over-the-counter card issuance
• Card funding via Agent Service Center
• Limited customer service (IVR only)
• Short term card expiration

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Account Features for Cardholders

• All cardholders accepted regardless of credit
  history
• No cost or low service fees
• Access to cash at virtually any ATM
• Make purchases at any location that accepts Visa
  Debit
• Purchase with cash-back at any many locations
• Automated Web account services
• Cardholder withdrawals limited to amounts on
  deposit

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Cardholder Survey Results
What is the main reason you signed up for the
Direct Benefit Card?
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96 of Cardholder Survey Respondents Would
Recommend the Card to a Friend
Overall, has your experience been positive or
negative?
95 POSITIVE
How satisfied are you with the following benefits
of the Card?
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Full Consumer Protection
FDIC Insurance Each cardholder should be
individually insured by the FDIC for up to
100,000 no consumer funds at risk Regulation
E Full compliance including monthly account
statements Zero Liability Policy Cardholders
are not liable for reported unauthorized
purchases or withdrawals Privacy Cardholder
personal information not used for marketing Data
Security In-house operations secure data from
unauthorized access
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No Significant Development Required by Government
Agencies
Fully automated process for high volume data
transfer

• Same as existing ACH process

Individual or small volume entry of new
enrollments through a secure Web site
Reconciliation reports, adjustments, queries
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Electronic Payment Cards for Disaster
Preparedness/Recovery

• Debit cards provide access to funds for displaced
  populations and when meeting urgent needs
• Integrated as part of the existing payments
  distribution program
• Effective in responding to individual, localized
  or regional scale disaster events

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Lessons Learned
Best if cards offered along with direct deposit
Cardholders prefer the safety and convenience of
payment cards
Advanced communication to payees improves
program/adoption success
Standardization reduces complexity
Programs should not shift costs to payees