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The Illinois Department of Human Services has signed an agreement to outsource management of court-ordered, child-support payments.
This is part of a growing trend by states that also involves replacing expensive paper checks with network-branded prepaid cards.
The cards reduce the expenses associated with processing checks, and the cards resolve disputes between warring parents because funds automatically are loaded onto the cards, according to Mercator Advisory Group, a consulting firm based in Maynard, Mass.
Affiliated Computer Services Inc., which is based in Dallas, will process transactions initiated with reloadable prepaid MasterCards, replacing paper checks issued by the state agency, which has offices in Chicago and Springfield, Ill.
The agreement between Affiliated and the department is for five years.
Comerica Bank, also based in Dallas, will issue the cards, says Ken Ericson, an Affiliated Computer Services spokesperson.
The deal between the department and processor is part of a growing trend by states and courts to implement court-ordered payments through network-branded cards, writes Mercator in its study report "The Resilient Nature of Prepaid: A Bright Spot in a Down Economy."
"Courts and the states have discovered that implementing court-ordered payments through network-branded cards significantly reduces pretrial motions and hearings related to nonpayment because it eliminates the "he said, she said" arguments, Mercator writes. "These early motions consume an inordinate amount of court time and, therefore, significant savings accrue when these motions are eliminated."
Movement toward prepaid cards appears to be recession proof. "Regardless of the impact the economy has on court proceedings, the fact remains that the number of court systems adopting prepaid cards is on the increase, and so total load on prepaid cards associated with court-ordered payments also will see an increase," Mercator writes.
The Illinois agreement eliminates the need for the state to mail child-support payment checks, which the department predicts will save it and estimated $233,880 annually, says Tom Green, the Illinois Department of Human Services spokesperson.
The department makes one mailing per month at a cost of $19,490, or 38 cents per check, Green says.
The government agency does not provide data as to much it costs to replace lost or stolent checks, he adds.
Comerica will issue approximately 35,000 prepaid debit cards to 35,000 Illinois residents who receive child-support payments, Green says.
It also will issue 30,000 prepaid cards to personal assistants or individuals who care for invalids in their homes, he adds, noting the state agency will load funds into the card accounts.
"We expect to have close to 100 percentage usage of the debit card as possible, but we cannot mandate the use of the card," Green says.
Cardholders can withdraw funds surcharge free from ATMs owned by Charter One Bank, Alliance One Credit Union, PNC Bank, National City Bank and the Shazam Privileged Status ATM network.
Affiliated Computer Services will charge a $1.35 per transaction for any withdrawals made at nonnetwork ATMs. Cardholders also can conduct transactions surcharge-free at the teller window of any bank that issues MasterCard.
If cardholders make a deposit at a Charter One or Shazam ATM one month, they are allowed to make one free ATM withdrawal the following month.
Affiliated Computer Services is scheduled to roll out the program in October. , Green says. ATM
