Payments Exchange


Debit cards that double as municipal IDs

By Phil Britt

Could the universally versatile debit card, the popular about-town payment option for most everyday Americans, soon be taking on another nonfinancial role? That is, as an official government identification card?

The city of Oakland, Calif., apparently thinks so. The city began distributing municipal photo ID cards last summer that double as prepaid debit cards.

The hybrid city ID-debit cards, which can be automatically reloaded with paychecks or wire transfers, are issued by Sunrise Banks in St. Paul, Minn. The $800 million-asset community bank, which holds a Community Development Financial Institution charter from the U.S. Treasury Department, would consider establishing similar hybrid card programs with other cities and towns, according to Joan Herman, the bank’s head of prepaid card programs.

Sunrise Banks operates three branches in Minneapolis, four branches in St. Paul and a prepaid card operation in Sioux Falls, S.D.
Herman calls the program marginally profitable, but she says the ID-debit card program fits tightly with Sunrise Banks’ mission to “empower and service the underserved.” If other community banks have similar goals to reach less-affluent, underserved customers, a similar ID-debit card program could work for them as well, she added.

The ID-debit card program in Oakland came about because the city saw a need to issue IDs for residents who did not have a driver’s license and needed to use city services, such as checking out library books or attending local community colleges. In the process, the city also recognized that many of the same residents tend not to have bank accounts, sometimes causing them to carry significant sums of cash and become targets of theft, according to Auturo Sanchez, Oakland’s deputy city administrator.

With the prepaid cards, cardholders can make purchases and have their paychecks directly deposited or have funds added from Western Union wire transfers. Cash can be withdrawn from the cards without surcharges from local MoneyPass ATMs.

By the end of 2013, the program had issued 4,800 cards, just short of the city’s goal of 5,000. The program was launched quietly last year by word-of-mouth, and the city plans to advertise the program this year with the hope of expanding residents’ participation, Sanchez says. As incentive for the program’s growth, its debit card fees will be significantly lowered, he adds.

Further debit card enhancements are planned for the program this year, including discounts at participating local merchants, bill payment services and mobile account management through a smartphone app.

Chicago-based Arroweye Solutions Inc. produces the cards, using technology to embed a number of security elements to ensure the cards cannot be copied, says Render Dahiya, the company’s president and CEO. “Every card is unique, there is no way to alter it,” he says. “It’s a good program for the consumer and a good program for the sponsor of the program.”

Phil Britt is a writer in Illinois.