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Prepaid debit cards to aid victims of disaster

[Monday, November 22nd, 2010]

The National Database and Registration Authority of Pakistan is now considering the use of prepaid debit cards to extend help to the victims of the floods that hit the country recently. The relief fund amounting to $460 million carried by 2 million prepaid cards powered by Visa will be issued to the calamity victims.

The use of prepaid cards in some government activities such as providing financial aid to people is not a new concept given this has been used to aid the victims of the 2005 Hurricane Katrina. Moreover the said strategy has also been used by The Pakistan government in 2009 to address the needs of the people who have been displaced violently in the north.

The use of prepaid debit card is now growing widespread popularity and acceptance. According to the study conducted by the Boston Consulting Group and commissioned by MasterCard the prepaid card spending is expected to reach $1.9 trillion in the year 2017. This figure is less surprising now that the use of prepaid debit cards is dominating both the private and public sectors way to give funds to workers, benefit recipients and to aid victims of disasters efficiently.

According to experts when prepaid debit cards are used in activities related to giving government benefits and aiding victims of calamities the cards usually are more equipped to protect consumers and set lesser fees. Nonetheless people are still advised to be wary of the traps and dangers the prepaid card use can post.

Using prepaid debit cards in giving reliefs to calamity victims may not also be an ideal method for the government to use. Federal Emergency Management Agency used the same method for the victims of Katrina however after a few days of doling out prepaid cards at some point they actually have to abort the operation for recipient`s identities plus their financial needs could not be verified by the agency.

Another consideration that experts are putting on the table is that the use of prepaid cards makes people more vulnerable to be victims of fraud. Nowadays fraud can be preformed in many discreet ways making offenders harder to be caught.

In relation to this another issue was raised with regards to the use of prepaid cards to aid victims of violence or calamities. Electronic modes of payment such as prepaid debit cards although appearing to be simple is actually a kind of matter that involves complicated processes. Thus the use of these cards must be coupled with full understanding to the part of the card holder. If people then are inexperienced and are not used to dealing with such mode of payment, the situation may become more problematic. Just like in the case of Pakistan where some of the recipients, as according to NADRA, have not yet experienced any form of banking.

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