In a bid to help members adjust to the introduction of Universal Credit in April 2013, eight major Credit Unions across England and Wales including, Castle and Minster and Laser, have chosen to provide prepaid financial services via Contis Group's ground-breaking credEcardplus e-money solution.
The eight new Credit Unions, which have a combined membership of 40,000, bring the total number of UK issuers offering credEcardplus to 42; a figure that has risen by 50% since the government announced plans to introduce Universal Credit in 2010.
By partnering with Contis, a leading European provider of end-to-end prepaid financial solutions, Credit Unions are able to offer members many of the money management facilities usually associated with traditional banking, like an e-account facility that is capable of supporting standing orders, money transfers and ATM withdrawals via the Visa network. This is of particular importance now, because Universal Credit will require unbanked benefit recipients to equip themselves with a basic account facility in order to accept the new initiative's single, consolidated, electronic benefits payment.
"Credit Unions are growing increasingly uneasy about how their unbanked members are going to cope with the transition to Universal Credit," comments Mike Fromant, Managing Director, Contis Group. "They understand that most benefits recipients budget on a weekly or fortnightly basis, according to how often their instalments are paid. Among their members are many who struggle to manage their finances effectively from one week to the next, so Credit Unions are rightly starting to ask questions about how members will cope with a system that will only provide monthly payments into a registered account.
"We are delighted to be working with so many Credit Unions around the UK in order to answer this need," continues Mike. "credEcardplus provides a credible and low cost alternative to mainstream banking, together with a host of benefits for both cardholders and issuers. We anticipate demand for our e-money solution will continue to increase as Universal Credit gets ever closer."
Since all credEcardplus transactions are managed online, Credit Unions adopting the solution are able to redirect considerable in-branch resources away from arduous cash handling processes, toward activities that deliver greater value to their members, such as providing guidance and support on financial planning. By working with members on the credEcardplus e-account facility, Credit Union staff can help them to prepare for the transition from weekly to monthly payments, by setting up standing orders for rent and utility bills, for example.
Credit Union members are also provided with a prepaid payments card linked to a rewards scheme that enables them to generate cash rebates on everyday purchases from a variety of participating retail outlets, such as Asda, BHS and New Look.
"Once they have weathered the transition to monthly payments, many Universal Credit claimants that have opted for a prepaid e-money solution are likely to find themselves in a more stable, accessible and beneficial environment through which they can manage their financial affairs," adds Mike. "The more Credit Unions can do to assist their members now, the easier it will be for them when the initiative starts to roll out in April."