Prepaid Cards Got Funds to Victims Fast

  Prepaid cards took on an essential role in helping displaced consumers get their lives back on track even though the Federal Emergency Management Association's card distribution proved a failure.
  FEMA discontinued handing out the MasterCard-branded prepaid debit cards after only a day. The agency distributed about 10,000 of the cards, which were issued by J.P. Morgan Chase & Co.
  Despite FEMA's feeble attempt, however, some industry observers predict that Katrina is a watershed event that will boost the use of prepaid debit cards by government for many years. More than 1 million of the cards have been distributed in connection with the hurricane relief effort.
  The American Red Cross distributed at least 300,000 MasterCard-branded cards, which carry from $360 to $1,565 in value, according to sources familiar with the cards, which support both PIN- and signature-debit functions. The sources say the Red Cross is ordering 100,000 of the cards to be produced daily.
  Moreover, Louisiana, Mississippi and Alabama all are taking advantage of a new disaster-connected program that uses existing electronic benefits transfer systems to deliver food and cash assistance via EBT cards. More than 280,000 EBT cards had been issued by Louisiana in the weeks after the U.S. Department of Agriculture on Sept. 9 began disbursing federal food-stamp benefits for consumers displaced by Katrina. Those are in addition to the 300,000 EBT cards, which also can be used for disaster assistance, already in circulation among existing food-stamp recipients in Louisiana.
  The USDA is allowing a 30-day allotment of food assistance using existing EBT programs. The agency estimates that about 977,000 households will be certified to receive EBT cards for disaster assistance.
  Chase is Louisiana's main EBT contractor and EBT card issuer, and it gets an undisclosed monthly fee for every household issued an EBT card. Typical contracts provide contractors up to $5 per month per EBT household. Chase gets interchange revenue when the Red Cross cards are used for purchases.
  Chase says it expects to issue about 1.5 million prepaid cards to Katrina victims, not including EBT cards.
  The rules to qualify for disaster benefits on EBT cards are less stringent than are those required to qualify for food stamps. Unlike traditional EBT cards, disaster recipients only need proof of residence in disaster areas.
  Because qualification is easier, the disaster-related EBT cards expire after 30 days, though they can be renewed, says Clarence Carter, deputy administrator for the USDA's food and nutrition service.
  Value placed on EBT cards is accessed via PINs. Transactions processed on them are handled by commercial processors. First Data Corp. processes EBT transactions for Chase. WildCard Systems, owned by Scottsdale, Ariz.-based eFunds Corp., processes the Red Cross card transactions.
  States increasingly are using their existing EBT infrastructure for disaster planning, says Ellen Bollinger, legal counsel for the Washington, D.C.-based Food Research and Action Center. Bollinger's group has lobbied for federal and state authorities to use the nation's EBT card infrastructure to deliver emergency food aid.
  The group in July produced a white paper, titled "An Advocate's Guide to the Disaster Food Stamp Program," which urges states to relax food-stamp qualification rules in emergencies.
  John Carrier, Louisiana EBT administrator, says the state is considering delivering disaster cash assistance via existing cards. Cash value on the cards could be used for ATM withdrawals.
  Besides EBT cards, which cannot be used for nonfood retail purchases, Louisiana also has begun using Visa-branded prepaid debit cards to deliver unemployment compensation instead of sending evacuees paper checks. Hundreds of thousands of Louisiana residents were expected to apply for unemployment compensation in Katrina's wake.
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