Oakland ID/Prepaid Card Fills Dual Needs for Underserved (March 2013)
By Adam Perrotta, Assistant Editor
Oakland, Calif., residents who lack bank accounts and U.S. government-issued photo IDs now have an option for electronic payments and identification. While several U.S. cities issue identification cards for residents who need an ID, the program’s backers say the Oakland City ID Prepaid MasterCard is the first to also act as a prepaid card—although other cities soon may follow.
The cards became available earlier this month to anyone able to present a Social Security card, foreign passport, foreign consulate ID or other form of acceptable identification, and proof of Oakland residency via documentation such as a utility bill, property tax statement or employment paystub. The cards are being distributed at two centers established by the city, with more enrollment centers to open soon. Venice, Calif.-based SF Global LLC is the independent sales organization supporting the program, while New York City’s Praxell Inc. is the program manager and University Bank of St. Paul, Minn., is the issuer.
“There were many city advocates who were pushing for a local ID card and when they figured out that you could mesh that with prepaid functionality, it was even more powerful to them.”
—Joan Herman, University Bank
The card’s dual functionality fills several important needs for Oakland’s residents. For example, the ID function gives cardholders access to city services, such as libraries and health care centers, along with a way to prove who they are to authorities—which could help cardholders avoid spending a night in police custody. “In Oakland, when the police stop you, if you can’t prove who you are, they can take you in and detain you until you can. We’ve heard from many residents that the ID portion of the card was what they were initially drawn to,” notes Joan Herman, senior vice president, prepaid card services, University Bank.
Fees at a Glance
Purchase price: $15 charge ($10 for seniors 65 and over)
Monthly fee: $2.99
Purchases: 75 cents for purchases
ATM withdrawals: $1.50 in-network ATMs available through MoneyPass Network; out-of-network ATMs may include an additional surcharge from the ATM owner.
Reload: $1 per reload cash at Western Union locations. (Agents also may charge a fee.)
Direct Deposit: Free
Meanwhile, the card’s prepaid feature means cardholders don’t have to rely on cash for making purchases, reducing their reliance on high-cost alternative financial services, such as check cashing outlets, and making them less of a target for crime. Consumers who rely on cash often are a prime target for muggers and thieves. “There were many city advocates who were pushing for a local ID card and when they figured out that you could mesh that with prepaid functionality, it was even more powerful to them,” Herman tells Paybefore.
Community leaders in several other cities also appear to be recognizing the appeal of dual-function ID/prepaid cards. The Los Angeles City Council voted in November to begin soliciting proposals for a city ID card, which would include a prepaid option. Meanwhile, Richmond, Calif., located about 10 miles north of Oakland, currently is negotiating with SF Global to launch a similar ID/prepaid card there, according to the city.
While such dual-function cards deliver obvious benefits to cardholders, it remains to be seen whether the economics make sense for the banks and program managers involved—and that largely will depend on whether cardholders actually use the payment functionality, according to Herman.
“As the program rolls out, we’ll see what the adoption is. We’ll monitor it monthly to measure what kind of [payment] activity we’re seeing,” says Herman, who notes that educating cardholders about the availability and benefits of the prepaid function will be key to ensuring the financial viability of the program. The city expects to issue 6,000 cards within the next year and plans are under way to add more features, including remittances, discounts at local merchants, bill pay, account management via smartphone and check-to-card loads at participating merchants.