The card was one of the review’s key recommendations and is meant to be cheaper and easier to administer than the government’s existing income management system. But according to the ABA, the proposal would require significant changes to current technology and cost time, money and resources.
Forrest’s idea is to provide welfare recipients with a card that doesn’t allow cash withdrawals and blocks access to alcohol, gambling and illicit services. The review argues that the new system would be cheaper and easier to administer than the government’s current income management arrangements because it would rely on the mainstream banking system and existing payments technology. However in a submission to the review, the ABA stated:
The ABA does not support using the banking and payment system for the implementation of the Healthy Welfare Card or an extension of the income management policy as a mandatory approach for all recipients of social security payments and assistance. There are a number of technological and practical considerations associated with the Healthy Welfare Card, which undermines the implementation of a workable, efficient and effective scheme.
In the current payments system, blocking access to cash and gift cards is relatively straightforward. But as the ABA points out, the system cannot automatically block purchases of prohibited goods like alcohol at merchants that sell alcohol alongside other goods such as groceries. The best it can do is block access to entire categories of merchant (eg pubs taverns and bars, package stores – beer, wine and liquor).
According to the ABA’s submission:
… currently there is no technology that would enable a card to block transactions or payments at individual purchases or allow some purchases and not others from a particular MCC [Merchant Category Code]. This change would require a substantial overhaul of the existing EFTPOS system in use by all Australian retailers to identify goods individually and if necessary preclude their purchase prior to check-out. It would require new EFTPOS devices and new transaction instructions (electronic messages and codes) to be introduced, which would potentially disrupt the efficiency of the payments system and increase the cost of point of sale transactions for all users (p5).
In the United States, proposals for cashless welfare systems have run into similar problems. In Massachusetts the government established a commission to see if it was feasible to move welfare payments to a cashless system. After receiving advice from consultants (the Ripples Group) the commission recommended against moving to a fully cashless system.