Prepaid corporate cards find new role in coronavirus aid
The spending and account management capabilities of corporate prepaid cards have been given new purpose in a pandemic-struck world dependent on government and charity aid.
Pressed to disburse emergency funds quickly and efficiently, charities and local governments are using prepaid corporate spending and expense management cards to help needy people affected by the coronavirus.
This trend is likely to continue post-lockdown, as these cards offer vastly superior spending controls and transparency compared to consumer-oriented prepaid cards and other means of disbursing aid. Cash handouts are unhygienic and lack any accountability, while paper-based food vouchers are slow, inefficient and non-reloadable, and standard reloadable prepaid cards lack features such as receipt management and accounting capabilities.
So local governments and charities needing to act quickly and keep scrupulous financial records when delivering COVID-19 aid looked to existing spending and expense management technologies developed in the corporate world. Among organizations adopting corporate prepaid cards for aid disbursement are Italian municipalities and smaller charities helping refugees and older people locked down in the U.K.
When lockdowns were imposed in the U.K., there were suddenly many people who, for health reasons, couldn’t shop for groceries or collect their prescription medications. Charities and volunteers who wanted to shop for these people faced a challenge — since many people are avoiding cash for hygiene reasons, volunteer shoppers needed a way to be reimbursed. Also, charities providing aid to refugees and other vulnerable people needed an alternative to cash handouts.
Soldo, a London-based corporate prepaid card program manager, has repurposed its Soldo Mastercards under the brand name Soldo Care for issuance by charities, not-for-profits, and local governments. Soldo has around 60,000 clients, mainly in the U.K. and Italy, ranging from small businesses to corporates with thousands of employees.
During the COVID-19 pandemic, Soldo is waiving its usual card service fee of £9 per month for local authorities and charities providing emergency aid, but charges a one-off fee for card manufacture.
Organizations using Soldo cards for aid distribution can set rules to control how and where the cards can be used, and all funds remain under the organization's ownership until transferred to merchants as payment. Soldo card spending data integrates into accounting software such as Xero and QuickBooks.
“Soldo showcases how prepaid cards are increasingly being used to address real issues for the most vulnerable in society as a simple, fast solution handling the secure distribution of money during times of need,” said Edoardo Volta, head of fintech at Mastercard U.K. and Ireland.
The first rollout of Soldo Care cards was in Italy in response to news reports of Italians hit by COVID-19 who were at risk of starving. Soldo, whose CEO, Carlo Gualandri, is Italian, already had a significant customer base as well as its R&D center in Italy. So the company decided to move quickly when the municipality of Milan, which was one of the coronavirus epicenters in Italy, asked for help in delivering emergency aid.
Matt Clare, chief operating officer at Global Processing Services, one of Soldo’s technology partners, said that Soldo Care is an example of how fintechs can quickly pivot and use technology to meet the specific needs of their clients, in this case charities and municipalities.
“From being contacted by the municipality of Milan, it took us two weeks to create a solution for emergency aid by removing some functionality from our core product,” said Darren Upson, Soldo’s vice president of small business for Europe. “Because we own our own technology stack, we had the flexibility to create Soldo Care. One feature we wanted to offer in Soldo Care is the ability to communicate with cardholders by SMS, as many people don’t have smartphones. Since SMS works with any type of cell phone, we use it for activating new Soldo cards, sending PINs and updates on fund top-ups.”
The municipality of Milan, which governs 1.3 million citizens, was the first Italian local authority to issue Soldo Care cards for distributing its portion of the Italian government's €400 million Solidarity Fund. As an alternative to Soldo Care, Milanese residents can choose to receive their benefits via a mobile wallet from Italian fintech Satispay.
A further 26 Italian authorities including Bergamo, Dolianova and Ventimiglia plan to use Soldo cards to distribute emergency aid in their regions. Over 20,000 families are receiving assistance via Soldo Care so far.
Historically, Italian welfare benefits have been disbursed through the Carta Acquisti prepaid program managed by Italian postal service Poste Italiane. For Soldo to win contracts from local Italian authorities is significant, given that previously they relied on Poste Italiane.
An important advantage of Soldo Care over the Poste Italiane cards is its ability to upload and reconcile shopping receipts through an app, said Arkwright Consulting partner Francesco Burelli.
“But, as both prepaid cards are issued on the Mastercard network, they can set permitted merchant categories through Mastercard’s InControl solution,” he noted.
In the U.K., charities issuing prepaid Soldo cards include West End Refugee Service, or WERS, which serves refugees and asylum seekers in Newcastle, and the Caistor Volunteer Group, which shops for socially-isolated people in Caistor, a small town with around 2,000 inhabitants.
In London, the Argentinian embassy issued Soldo Cards to its citizens who were stranded in the U.K. due to the lockdown, said Upson.
“We’ve issued our clients who are destitute asylum seekers with Soldo cards in response to COVID-19,” said Melissa Younger, office manager at WERS. “Usually, these clients would come to see us each week to receive a cash payment to survive on. Now that our approximately 100 clients each have a Soldo card, we can automatically top up payments to them to avoid their having to come to see us in person.”
Rebecca Axcell was involved in setting up the Caistor Volunteer Group. “At the start of the lockdown, there was no guidance to volunteer groups on how to organize home shopping programs,” she said. “I was the first volunteer to shop for someone, and I realized we needed to make the payment process as contactless as possible.”
Because of her experience of running a travel business, Axcell looked for a payment solution that would offer accountability and transparency while removing risk and trust issues from the volunteers. Accountability was important as the Caistor Volunteer Group received funding from various donors and is incorporated as a not-for-profit company with a community bank account.
Axcell decided that providing volunteers with prepaid cards, which the group would prefund, was the best option. She looked into prepaid cards offered by the post office, but, as these were basically travel cards, decided they weren’t suitable. She then found Soldo on Google.
Caistor’s volunteer shoppers issued with Soldo cards scan and upload receipts to their Soldo app, adding the name of the person they shopped for. Soldo notifies Axcell when the funds on the prepaid cards are low, so she can top them up from the community bank account.
“Our volunteers have found the app easy to set up and use,” said Axcell. “The people they shop for either make an online bank transfer to our bank account once they’ve received their shopping, or the volunteers tell us they’ve shopped for someone and we take card payments over the phone using Squareup. Both Soldo and Squareup feed into Xero for accounting purposes so we can match shopping expenses to incoming payments.”
Having an accurate way of tracking spending and a simple method for reimbursement was important, as relying on cash reimbursements and IOUs could lead to disputes or elderly people forgetting to pay for their shopping.
“If older people don’t have online banking or credit cards, they usually have family members with credit cards or online banking apps who can reimburse us for shopping for their relatives," Axcell said. “After the crisis has passed, it’s our intention that the group will become permanent and will morph into a community/good neighbor project which the cards will still be used for.”