Social Assistance Pilots ProgramSA Pilots Seminar

Social electronic cards: International experience

Viachaslau HerasimovichCASE Ukraine

March, 2010

1.1. Kinds of electronic social cards. Their advantages and disadvantagesKinds of electronic social cards. Their advantages and disadvantages

2.2. Example of advanced technologies application in the U.S.A.Example of advanced technologies application in the U.S.A.

3.3. Social card of Moscow residentSocial card of Moscow resident

4.4. Comparison of Odessa and Moscow projectsComparison of Odessa and Moscow projects

5.5. Conclusions. RecommendationsConclusions. Recommendations

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ContentContent

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Kinds of electronic cards used in the system of social protection

Bank cards. Currently being introduced in developing countries and accepted in developed countries as given. They are used to deliver monetized benefits and help to protect entitled beneficiaries from theft.

Discount Cards. Used to deliver non-monetized privileges usually in transportation and allow controlling of who is benefiting from privileges. Used all over the developed world.

Smart Cards. Rather sophisticated way of delivering monetized or non-monetized benefits and most importantly of controling the usage of funds. Best examples can be found in the USA and Moscow.

Bank cards

Source: Finance Ministry of Ukraine

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Advantages Drawbacks

Simplify and reduce the cost of assistance delivery (savings on administration)

Elderly population, is notnecessarily technically savvy and may have difficulty performing transactions

Protect the receiver from theft and loss of funds

Offer freedom of movement to the recipient

Increase volume of non-cash transactions

Discount cards

Source: Finance Ministry of Ukraine

Advantages Drawbacks

Provide significantly better protection against fraud

Expensive to implement

Facilitate creation of a register of beneficiaries

Difficulty of coordination between local and central budget

Enable to track the number of discounted and free journeys

Possible discrimination by place of residence

Monitor the flow of passengers

Mostly used in provision of transportation privileges. Discount cards enable the eligible passengers to have either free access to the public transport system and to pay less for their journeys.

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Examples of implementation of transport discount cards

Smart Cards

Source: Finance Ministry of Ukraine

Not only the amount of available funds are stored in the memory of smart cards but also a list of essential goods, which the recipient can purchase with these funds. Thus, the state both ensures the eligibility for social assistance and controls that this assistance is properly provided.

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Example of using smart cards in the USA - WIC program.

Federal grants to States for supplemental foods Objective is to provide supplemental foods, health.

care referrals, and nutrition education for low-income eligible who are found to be at nutritional risk.

Total number of beneficiaries is 8.7 million. Funding in 2008 – USD 6.2 billion.

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Conditions for successful smart cards implementation on example of WIC program

Participation of large retailers with a network of stores which are able to accept the benefit smart card

Awareness and acceptance of the rules by both the assistance recipients and its providers

Investments into building a suitable future proof smart card infrastructure

Focus on long-term goals

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Social card of the Moscow resident

Name,Benefits category

Bar code - discounts in trade

Contactless chip:Public transport

Magnetic stripe:Banking application

Card number, date of issue

Photo

Social card of the Moscow resident – is a personal (named) plastic card with photo, magnetic stripe and microchip, which is issued to a resident of Moscow having the right to receive social assistance.

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Social card of the Moscow resident

The actual registration of volume and quality of granted privileges Passenger flow monitoring Ability to get detailed report on all aspects of transport functioning

and provision of benefits Automatic bank transfer of funds Provision of social benefits in trade Payments and discounts for medical services Collecting of personal information from the Social Register and

other information systems

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Social card of the Moscow citizen. Purposes and participants

Project Participants: Moscow Committee for Social Security Moscow Underground Moscow Railway Moscow Compulsory Medical Insurance

Fund Department of Economic Policy and

Development Department of Consumer Market and

Services of the Moscow Government Bank of Moscow Visa Payments System State Enterprise “Moscow social

register”

Objectives: regulate the delivery of social benefits

to Moscow citizens - registration and targeted provision of social support

provide full control and accounting transparency of financial flows and control over the targeted use of budgetary funds in the field of social welfare

create a common electronic register to track down state benefit recipients

monitor the compensation of expenses to organisations that provide privileges

simplify budget preparation, analysis and forecasting of budget expenditures based on actual services consumption.

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Social card of the Odessa resident

Introduced 1 April 2008 Eligible :

Multi-children families Disabled of 1st group Pensioners getting minimum pension

Help provided Discounts for bread Hot food Medicines allowances Housing and utilities benefits

Comparison of Odessa and Moscow projects

Moscow Odessa

Funding source Local and central Local

Number of potential beneficiaries

5 million 60,000

Funding, 2008 RUR 20 billion(UAH 5.3 billion)

UAH 40 million

Functions integration Multipurpose use Subsidies on food, medicines, housing and

utilities services

Payment system Visa International Service Association

VISA

National system of mass electronic payments

(NSMEP)

Trade off between simplicity and effectiveness

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Integration of functions

Storage of personal information on the

card

Connection to the bank account

Costs distribution amongst partners

Cardholders awareness

Security, data protection

Simple procedure of issue and support

Accessibility and convenience of services

Card ownership

Different requests to security

Effectiveness Requirements Issues that challenge simplicity

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Conclusions. Recommendations

Electronic social cards may be successfully introduced at both local and national level.

While providing transportation benefits through electronic cards is crucial for effectiveness and success of their introduction at local level, significant value and variety of benefits provided through one card becomes important when the card is introduced across the country.

To increase attractiveness of SEC, cooperation of several benefit-providers with reliable processing system and other entities involved would be required.

A separate analysis will be needed to analyse technical particularities of SEC introduction as well as to evaluate costs and benefits of it.

Due to little experience of electronic cards usage among vulnerable groups of population in Ukraine, cardholders’ awareness may become a major issue, which may require well prepared information campaign.