Florida is preparing to make Visa-branded reloadable debit cards an option this fall for residents obtaining unemployment benefits from the state, according to the state's Agency for Workforce Innovation.
The agency expects the move to save Florida about $317,000 per year by reducing costs associated with in printing checks, postage and other fees, says Robby Cunningham, a spokesperson for the agency.
Florida would become the 26th state to use debit cards to dispense unemployment benefit payments, according to the National Association of Workforce Development Professionals. Florida was one of 18 states considering or planning to roll out cards this year.
The state’s unemployed residents still have the option to receive benefits via direct deposit or check. As of February, Florida had one of the highest unemployment rates in the nation at 12.2%. That national rate was 9.7% in March. Last year, 1.1 million Florida residents received unemployment benefits, according to the agency.
Some Florida residents are concerned about fees eating away at their benefits and will opt to keep receiving benefits the way they have been, according to local media reports. The state, however, is not concerned fees will scare off the unemployed because of the available free ATM network residents can use to make withdrawals or balance inquiries, Cunningham tells PaymentsSource.
Residents can access funds and account information free at 1,800 ATMs, including Wachovia and Wells Fargo & Co. ATMs and the MoneyPass ATM Network. Wachovia and Wells Fargo issue the cards. Wells owns Wachovia.
“It’s a matter of the customer being aware of where they are using the card,” Cunningham says. “They could conceivably have the card forever and never pay a fee.”
If a cardholder, however, has to withdraw funds using an ATM outside the network, Cunningham contends Florida charges the lowest fees in the nation based on an agreement with Affiliated Computer Services Inc. Affiliated processes the card transactions and manages programs for 10 states.
Wachovia and Wells Fargo & Co. charge cardholders $3 per out-of-network ATM withdrawal. Checking a balance costs 75 cents when using an ATM not in the network. Purchases are free. Affiliated did not immediately know what PIN-debit network brands appear on the card.
States increasingly prefer to pay unemployment compensation with debit cards instead of checks for a variety of reasons, the biggest being to save money. Recipients also receive funds faster with debit cards, which is a benefit Florida will highlight when it begins marketing the option, Cunningham says.
Some states have held off rolling out debit cards for unemployment benefits because they must reprogram their computers to handle the change. Florida is working to upgrade its computer system, but the process will not be completed until 2013. Still, Cunningham expects the state can handle the change.
