The 16 different German states have decided to introduce (sorry, all links in this post link to German websites) a payment card for refugees (two out of the 16 have a slightly different approach than the rest, but all will introduce the card). The card will replace cash payouts from the authorities to refugees, and instead, the refugee will receive a pre-funded debit card that can be used to spend the financial benefits. The offering is purely card-based, and no bank account will be made available.
While there are some benefits in terms of limiting card usage (i.e., blocking gambling facilities), the main beneficiaries are likely the authorities that will have an easier system to payout and manage benefits for refugees. As an outsider with limited knowledge, it is hard to quantify the benefits of cashless payouts to refugees, but when a country like Germany chooses cards over cash, the benefits are likely big ;-)
As a frequent reader of this newsletter, you might remember news in the past few weeks where certain German cities or regions introduced a ‘SocialCard’ already. Those were the first movers that cooperated with the company Publk (or trading name SocialCard) to introduce such a card. The decision of the 16 German states to introduce a payment card does not necessarily mean that all of them will cooperate with Publk / SocialCard; however, the company is in a very good position to win many of the tenders that will be happening soon. Their CEO, Joerg Schwittwala, shares in a podcast some further details about the product offering.
The payment card for refuguees is a great example where a card is being used as a way of transferring fund ownership to another party. You could argue that a corporate expense card serves exactly the same purpose. In this case, the employee can make a transaction without needing to receive cash from her employer. I would assume that similar benefits could be brought to caretakers and their organisations in cases where they are legally responsible for the financial situation of the individuals under their care and pay out “pocket money” on a regular basis.
Note: If you are wondering how a payment card for refugees falls into the definition of embedded finance, I agree with you. Obviously, this product is not ‘embedded’ into a non-financial offering; nevertheless, I believe this is a good example of parties that historically have not offered payment or banking products but are now doing so for efficiency reasons.
