Budgets by Card: How

prepaid can transform the

delivery of Individual Budgets

Savings from Corporate

Transactions

March 2010
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets
2 and monitoring payments has frequently
Introduction
Increasing numbers of Local Authorities are
using prepaid cards in response to the
practical and bureaucratic challenges
presented by Individual Budgets. Opportuni-
ties for significant efficiency savings through
reduced administration processes, improved
care monitoring and protected delegation of
care commissioning to service users are some
of the key benefits being realised through
effective prepaid implementation.
The Challenges of
Individual Budgets
Since the introduction of the Community Care
Act 1996, personalisation has become the
cornerstone of social care reform, with all
three main political parties advocating the
delegation of care commissioning to the
customer to some degree. In this context, the
Putting People First directive commits all
councils in England to increasing customer
choice and driving improvements in care
outcomes by offering Individual Budgets
before April 2010, with a delivery target of
30% of all those eligible for social care
supported through Individual Budgets by April
20111. Individual Budgets are also being
piloted by NHS trusts.
“Delivering and monitoring
payments has frequently
proven to be problematic
and inefficient.”
A significant challenge to the delivery of
Individual Budgets has been the need to
establish the infrastructure and staffing
required to support the initiative. This extends
beyond social workers, care practitioners and
clinicians through to finance officers, admini-
stration staff and ICT personnel. For these
clerical personnel in particular, the administra-
tive burden involved in assessing, delivering
1
Putting People First: A shared vision and commitment to the
transformation of Adult Social Care, December 2007
© Copyright Ticon UK Limited 2010
proven to be problematic and inefficient.
Whilst careful monitoring of care services
spend through reconciliation is essential in
ensuring the integrity of an Individual Budgets
programme, paper-based reconciliation has
proven both unwieldy and costly. Typically this
involves collecting receipts from service users,
processing them manually and matching them
with corresponding bank statements. Recon-
ciliation may in some cases involve having to
contact the customer to query specific
transactions, sending an employee to further
assess a customer‟s needs or attempting to
retrieve money from a service user‟s allocated
funds if an individual‟s purchasing behaviour
warrants such action.
Other problems have also arisen:
 A light-touch approach to monitoring
Individual Budgets, whilst lessening the
administrative burden, may not provide the
requisite scrutiny, assurance or support to
the customer that are essential to ensuring
the care aspect of Individual Budgets.
Furthermore, intermittent monitoring of
customer activity may fail to identify
spending patterns that could indicate a
rapid decline in a service user‟s condition.
 Finance staff have no means of calculating
payments based upon the amount
remaining in an account, resulting in
unnecessary overpayments when a
customer has used only a fraction of a
previously disbursed amount.
 Recovering funds, often due to a cessation
in the requirement for care, has proven
extremely difficult, especially in the event
where a customer has passed away.
 Poor money management by clients, who
may lead chaotic lives and have poor credit
histories, can lead to funds disbursed for
care commissioning being redirected for
other purchases unrelated to their care
needs.
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets
3  Customers unable or unwilling to open a
bank account are unable to receive funds
via BACs, which is a necessary condition
for receiving Individual Budgets.
These challenges are only set to become
more acute as social and demographic
changes place more pressure on an already
overstretched system. An aging populace
(20% of the English population will be over 65
by 2022) can only add to the pressure on
authorities to find a practical, cost-effective
solution to the challenges presented by
Individual Budgets.
Introducing Prepaid
Cards
Delivering Individual Budgets effectively and
efficiently can be achieved through the
adoption of prepaid cards, which allow care
providers to disburse payments and monitor
their clients‟ transactions at a detailed level,
significantly reducing the bureaucratic
demands on resources.
“Through implementing
prepaid, the infrastructure of
disbursing payments can be
transformed into a valuable
tool rather than a bureau-
cratic burden.”
Prepaid cards work differently to normal credit
or debit cards, as money is pre-loaded onto
the card by the council or NHS trust, and the
card is then issued to the client in receipt of
the Individual Budget. The cards can be
topped-up at regular intervals or for one-off
payments, and the funds are available to
spend with any organisation able to accept
card payments, or can be programmed to
permit service users to withdraw cash from
any ATM.
© Copyright Ticon UK Limited 2010
Through implementing prepaid, the infrastruc-
ture of disbursing payments can be trans-
formed into a valuable tool rather than a
bureaucratic burden, as a result, the public
sector and their clients are increasingly
reaping these benefits, as prepaid adoption
proliferates nationwide.
“Managers can always be
aware of what a client has
spent, including when and
where purchases have been
made.”
More Efficient Operations
A significant advantage of prepaid cards in the
context of Individual Budgets is the reduction
in time and effort associated with reconciling
customer transactions. Card statements can
be securely accessed online, reducing both
manual intervention and the time spent
reconciling expenditure with paper receipts,
while also reducing the margin for error. The
time saved enables the public sector to
operate more efficiently, and can lead to
reduced wage bills, or a reduction in the
reliance on temporary staff. Managers can
always be aware of what a client has spent,
including when and where purchases have
been made. This knowledge helps social care
staff to identify clients who may be struggling
to adapt to Individual Budgets and also helps
finance staff gain a clear understanding of the
financial health of any particular scheme.
Full visibility of spend is important from an
audit and control perspective and helps to
reduce the risk of fraud, whilst still allowing the
assessed individual to make their own choices
on how they spend their Individual Budget.
Should a Local Authority seek to integrate
different funding streams into the Individual
Budget, then the prepaid card can receive
funds from a number of different sources to
accommodate this.
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets
4 The card can be cancelled at any time, and
any funds remaining on the card will be
returned to the organisation without a
potentially lengthy recouping process.
The following graph illustrates projected
annual Adult Social Care administration cost
savings across ten Local Authorities, with the
average anticipated saving at 36%. These
figures stem from business cases completed
by Ticon which analyse the likely savings that
each council would achieve by switching
service users from bank accounts to prepaid
cards. Projected savings depend heavily on
existing processes and is the reason why
there are large discrepancies seen between
some councils.
60%
40%
20%
0%
A B C D E F G H
Percentage Saving (%)
Average % Saving
Better Care Monitoring
Local Authorities can also gain more control
over social care spending as they are able to
specify how the cards are used. So, whilst
Individual Budgets demand flexibility, there
would be certain categories (such as book-
makers, for example) where the cards could
be legitimately blocked. The withdrawal of
cash using the card could also be restricted if
all likely purchases could be made via a card
transaction.
2
Source: HM Treasury, Financial Inclusion Taskforce Annual
Report, October 2009
© Copyright Ticon UK Limited 2010
Improved Customer Choice
More than one prepaid card can be used to
draw monies from a single allocation of funds;
it is therefore possible to issue cards to the
client‟s carers, thereby allowing their carers to
transact on their behalf. Service users can
commission their own care and pay for it
online, over the phone or at the point of sale,
as well as being able to withdraw funds at an
ATM if authorised by the issuing Authority.
Choice, and the ability to self-direct support
are the two key facets of Individual Budgets;
prepaid cards place the selection of care in the
hands of the service user and enable choice in
a practical way.
“No monetary value is
stored on the card itself, so
loss or theft of the card does
not result in loss of funds.”
Enabling Customer Empowerment
A recent report by HM Treasury cites evidence
that those without access to a bank account
are likely to be on a low income, the unem-
ployed or long-term inactive, the elderly, lone
I J
parents and council and housing association
tenants; this amounts up to 1.75 million UK
adults without a transactional bank account2.
Prepaid cards do not require a banking
relationship or credit approval and can
therefore be used by individuals who would
not normally be able to access banking or card
facilities. Prepaid cards can therefore give
access to the electronic economy and start a
banking relationship for many disadvantaged
citizens, promoting financial awareness and
social inclusion.
Added Security, Reduced Fraud
Chip and PIN security ensures that only
authorised individuals are able to use prepaid
cards. No monetary value is actually stored on
the card itself, so loss or theft of the card does
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets
5 not result in loss of funds, and all funds on the
card are automatically insured by the issuing
bank. Cards can be remotely blocked if
required and funds re-credited to the main
account, which enables overpayments to be
reclaimed quickly and efficiently.
“Using prepaid cards will
lead to many processes
being reduced, with some
being rendered entirely
unnecessary.”
Converting Saved Effort into Cash-
able Savings
Calculating the effort reduction likely to be
gained from using prepaid cards requires an
examination of the essential, regularly
performed tasks surrounding the processes for
administering Individual Budgets. Such tasks
include calculating payments, monitoring
expenditure and reconciling receipts and
returns. Using prepaid cards will lead to many
of these processes being reduced, with some
being rendered entirely unnecessary.
Time savings can be recovered as cashable
savings through reorganisation and rationali-
sation, which will be most effective in depart-
ments where a higher volume of common
tasks are concentrated amongst fewer
individuals.
The Cost of Prepaid Cards
Prepaid cards do attract charges which vary
depending on the agreement between the
Local Authority and their card issuing bank.
Charges applied to prepaid cards will vary
from bank to bank and fees may apply across
a wide range of functions, some of which can
be levied against the cardholder. Buyers need
to take care when selecting a prepaid product
to make sure that the fee arrangements are
fully understood and that a robust business
case is in place for the use of prepaid.
© Copyright Ticon UK Limited 2010
Making Prepaid Happen
If the maximum benefits of prepaid are to be
realised and the transition from paper-based
payments is to proceed as smoothly as
possible, careful consideration should be
given to the design and delivery aspects of
prepaid implementation programmes:
 How will payments and spending recon-
ciliation be handled in the future?
 What information is going to be passed
onto the prepaid cards?
 What new processes need to be adopted
by social workers or clinical personnel, as
well of those in finance and accounts?
 What happens when a prepaid card is lost
or stolen?
 Will our IT systems need to be reconfig-
ured to handle prepaid cards?
 How should we engage with our suppliers
to ensure they can accept prepaid cards?
 What should functional and technical
specifications for a prepaid card implemen-
tation include?
Getting the right answers to these and many
more key questions is fundamental for
implementing a successful prepaid card
scheme.
Change Management
 Operating a prepaid scheme will change the
responsibilities of staff members involved
with the administration of Direct Payments
and Individual Budgets; from Social
Workers to Finance Officers, staff duties
may alter substantially, and this shift in
behaviour requires careful management.
 Staff will generally have fewer responsibili-
ties, since many processes will now
become automated, although some tasks
will not change.
 However, data on client‟s spend will be
available to staff, this data will need to be
protected as well as shared.
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets
6 Communications & Development
 Staff members will require training to
understand how prepaid cards work.
 Service users will need to be educated
about how the cards work, where they can
use the cards and what fees are associated
with using them. They will also need to be
aware of security issues such as protecting
their PIN and storing their card securely.
Technology
 Financial IT systems may need to be
customised to accommodate prepaid
technology, which allows payments to be
processed through cards, and staff
members will need to learn how to use the
system for monitoring purposes.
 Paperless technology requires new
processes which staff members will need to
adapt to.
Supplier Engagement
 The Authority will need to determine which
of their Service User‟s suppliers are able to
accept card payments („Visa-capable‟) and
which are not. They must also actively
consult with them from the outset of any
implementation, determining the costs,
training and processes required for
converting non-Visa capable suppliers to
become Visa-capable.
Client Engagement
 Clients, and where appropriate, their carers
and families, will require training and
support to ensure they understand how to
use their prepaid cards, where they can use
them and what services and products they
are permitted to commission using the
cards.
© Copyright Ticon UK Limited 2010
Ticon
Ticon, Local Government payments special-
ists, are currently helping more than thirty-five
councils to implement prepaid cards. Ticon‟s
prepaid support services can help public
sector bodies deliver programmes that are
both cost effective and beneficial to service
users. Ticon‟s mission is to work with clients
and provide the highest quality advice and
support to help deliver change and improve-
ment to the public sector. The services that
Ticon offers in support of prepaid card
implementation programmes include:
 Business Case Formulation
 Functional Specification
 Technical Specification
 Tendering Advice
 Planning & Implementation
 Bank Research, Liaison & Negotiations
 Supplier Engagement
 Project & Programme Management
For more information about Ticon and how
they can provide the insight and support
necessary for a successful prepaid card
implementation, call Ian Makgill on 020 7836
1999 or visit www.ticon.uk.com
What people say about Ticon
Ticon recently developed a business case for
the implementation of prepaid cards at the
London Borough of Havering, identifying
projected savings for the administration of
Adult Social Care payments of 66% over three
years.
“I highly recommend Ticon for the knowledge
and deep understanding of both the issues
faced by local government and how prepaid
cards can be used to solve them. Ticon were
instrumental in developing a rigorous business
case for implementing prepaid cards in our
Children and Young People’s Services and
Adult Social Care departments.” – John
Scowen, Procurement Manager, London
Borough of Havering
 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets

7 Lewisham's prepaid scheme for young people Ticon UK Ltd.

leaving care has won a coveted award from 146 Strand
PayBefore.com, the US's largest online London
resource for the prepaid industry. As one of WC2R 1JD
the first authorities to implement prepaid,
Lewisham is continuing to expand their t: 020 7836 1999
payment schemes and are reaping the e: ian.makgill@ticon.uk.com
benefits, with lower costs, happier clients and w: ticon.uk.com
more efficient services.

“Working with Ticon has allowed Lewisham to

select the most appropriate product to deliver
an effective prepaid scheme which meets the
need of both the organisation and our citizens.
Over the course of the project, Ticon have fully
understood our requirements and liaised on
our behalf with our provider to ensure that
these requirements are fulfilled.” – Mike
Ireland, London Borough of Lewisham

In 2009, Ticon won a Global Business

Excellence Award for their prepaid programme
management in the public sector. They were
also nominated for the Best Corporate/
Government Prepaid Programme Award at the
Prepaid Awards in recognition for their work
on Lewisham‟s leaving care programme.

"Ticon are leading the way with regard to

prepaid programmes across the public sector.
The judges were particularly impressed with
the work that Ticon has done with councils to
promote the benefits and efficiencies that can
be realised through the introduction of such
programmes which deliver real benefits for all
concerned. They are a viable alternative to
cash payments, being both flexible and
secure." – Chair of Judges, Global Business
Excellence Awards 2009

© Copyright Ticon UK Limited 2010

 Budgets by Card: How prepaid can
transform the delivery of Individual
Budgets

8
Are you prepared for prepaid?
Fully understanding your answers to the following key questions is fundamental for implementing
and managing a successful prepaid card scheme:

Cardholders & Service Users

 What training/support will service users require to use cards appropriately?

 What materials will be provided to cardholders at issue?
 How will it be explained that cards can be blocked (e.g. gambling)?
 What other important issues need to be communicated to the service user?

Implementation Programme & Planning

 How should funds be allocated to for the programme?

 Which staff members will be able to have access to cardholder information?
 What training will staff require, and who will be responsible for training delivery?
 What aspects of the programme need to be tested before prepaid goes „live‟?

Technology & Systems

 How will payment instructions and programme details be sent to the bank?
 How will the integrity of your cardholder list be maintained?
 What steps are necessary to ensure PCI and DSS compliance?

Ongoing Prepaid Management

 How will prepaid card PIN numbers be issued and managed?

 How will emergency payments be handled by prepaid cards?
 How will the Local Authority be able to recoup funds if they wish to do so?
 Who is responsible for reporting lost and stolen cards to the bank?

Suppliers and Other Agencies

 Are all of your suppliers able to accept Visa payments?

 What are the benefits for suppliers to become Visa-capable?
 How can Local Authorities persuade suppliers to accept Visa payments?

For answers to any of these questions or others, please give us a call: 020 7836 1999

© Copyright Ticon UK Limited 2010