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The surge in the nation's unemployment rate has been good news for the distribution of prepaid cards that pay jobless benefits, according to a report released by Mercator Advisory Group. In its 36-page study, "The Resilient Nature of Prepaid: A Bright Spot in a Down Economy," Mercator identified the issuance of branded, prepaid unemployment cards as one of 18 prepaid segments that are growing in the nation's down economy. Maynard, Mass.-based Mercator identified 33 prepaid card segments. Seven of the segments were likely to see negative growth, and eight were likely to experience neutral growth, Mercator says. Twenty-five states currently offer prepaid debit cards to pay unemployment benefits, according to a survey by ATM&Debit News, a CardLine sister publication. Another 20 states are either considering or planning to use prepaid cards. Some of those states have pilots in place to pay unemployment benefits with prepaid cards. JPMorgan Chase&Co. is one the largest issuers of prepaid cards for unemployment benefits. New York-based Chase provides unemployment benefits via prepaid debit cards to nine states. The states are: Alaska, Arizona, Colorado, Louisiana, Michigan, New York, Rhode Island, Texas and West Virginia. "The big winner in prepaid is almost certainly going to be state unemployment," Mercator says. "Every major state except California [California is considering paying unemployment benefits with prepaid cards, according to ATM&Debit News survey data.] has now made distribution of state unemployment funds on prepaid cards the preferred mechanism whenever the resident is unable to receive funds through direct deposit. With the unemployment rate increasing dramatically since the middle of 2008, this segment is sure to see a major increase in loads."
