Magazine article American Banker

R.I. Plans to Send Unemployment Benefits Via Chase

Magazine article American Banker

R.I. Plans to Send Unemployment Benefits Via Chase

Article excerpt

JPMorgan Chase & Co. won a contract to provide reloadable prepaid cards to Rhode Island to replace unemployment checks.

Rhode Island is only the eighth state to move from paper checks to cards for unemployment benefits. JPMorgan Chase, which also has contracts with New York, Arizona, and Louisiana, handles half of them.

Laura Hart, a spokeswoman for Rhode Island's Department of Labor and Training, said that by moving to a card-based format, "we're saving about a half a million dollars in administrative processing and mailing fees" a year.

"When you have a check, you have to mail it every week, whereas a debit card gets mailed once, and the money gets automatically deposited," she said. "So we're losing a step, and we're losing paperwork, and we're saving trees."

Rhode Island launched a test of the cards Wednesday and plans to roll them out statewide by the end of March or early April, Ms. Hart said.

The state also offers unemployment benefits through direct deposit.

In moving from checks to cards, unemployment benefits have lagged some other government benefits, such as food stamps and the Temporary Assistance for Needy Families program.

Beth Hosen, JPMorgan Chase's public sector sales manager for the Northeast, said in an interview that states tend to be "cautious" when changing to cards. "It's a challenge. They have a whole paper infrastructure now."

Numerous states are looking into switching their paper-based systems to cards, Ms. Hosen said. The federal government, which funds most unemployment benefits, also may be creating an incentive to switch to cards, because it is considering lowering its subsidies for postage, she said.

JPMorgan Chase has provided various types of government benefit cards for several years, Ms. Hosen said, but the business got a major boost in 2005, when the New York company handled the Federal Emergency Management Agency's emergency relief cards for Hurricane Katrina victims. …

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