Colorados Reloadable Stored Value Card for Delivering Child Support - PowerPoint PPT Presentation

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Colorados Reloadable Stored Value Card for Delivering Child Support

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No checks, minimal exposure to overdraft. Results: Win-Win for All. Merchants: ... Overdraft protection for those who qualify. What's next ... – PowerPoint PPT presentation

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Title: Colorados Reloadable Stored Value Card for Delivering Child Support


1
Colorados Re-loadable Stored Value Card for
Delivering Child Support
  • Craig R. Goellner, Systems Director
  • Colorado Division of Child Support Enforcement
  • craig.goellner_at_state.co.us
  • Dec. 5, 2002

2
Background
  • Colorado (October 2002)
  • Per month - 115 thousand disbursements worth 23
    million
  • Direct deposit 35
  • Still issuing 88,000 checks per month
  • Nationwide each year
  • Child support collections per year 16.6
    billion
  • Assume 1/3 direct deposit
  • Estimate 54 million child support checks

3
Promotion of Direct Deposit
  • Have promoted direct deposit since 1995
  • Issue how to reach the un-banked?
  • Many clients do not have or cannot qualify
  • Our efforts to promote bank accounts did not work
  • U.S. Bank suggested use of stored value card
  • Modified to load using individual ACH transactions

4
Pilot Program
  • January 2002 to date (October 2002)
  • Cardholder fee limited to 1.50 per ATM
    transaction
  • 10,000 random solicitations in checks
  • Response rate over 10 applied for cards
  • Cash withdrawal 42
  • Point of sale 58
  • Average balance per card 95

5
Results Win-Win for All
  • Cardholders
  • Love the card
  • Mainstreams clients into commercial financial
    world
  • Eliminates check cashing fees for cardholders
  • No checks, minimal exposure to overdraft

6
Results Win-Win for All
  • Merchants
  • Reduces liability for merchants who cash checks
    (e.g. grocery stores)
  • Use is transparent
  • CSE agency
  • Virtually no operational changes required for CSE
    agency systems
  • Appears to be self-funding through merchant ATM
    fee

7
Unanticipated benefits to cardholders
  • Many use it to segregate childs finances from
    their own
  • Monthly statement provides record of how support
    was paid
  • Prestige of VISA logo, looks like a credit card
  • Many are using to save amounts for the child

8
Potential Enhancements
  • Allow direct deposit of payroll to same card
  • Transfer funds to another account or pay bills
  • Overdraft protection for those who qualify

9
Whats next
  • Statewide offering to all parents receiving
    support
  • Two other states are participating with Colorado
  • Goal (hopes?) 75 direct deposit by the end
    of 2004
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