Posted 23/06/2017 by Don Arthur
The Australian Government has two separate cards designed to restrict how income support recipients can spend their payments—the BasicsCard and the cashless debit card. While both schemes rely on cards provided by payments company, Indue, they work in different ways.
The biggest differences are:
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Who can accept the card. The BasicsCard can only be used at merchants that the Department of Human Services has approved. The cashless debit card can be used at any merchant the Department has not blocked (provided it is able to accept Visa Debit).
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Merchant responsibilities. All merchants who accept BasicsCard must sign an agreement not to process transactions for excluded goods such as alcohol or tobacco. Most merchants who accept the cashless debit card have no agreement with either the Department or the card provider.
Both cards prevent income support recipients from withdrawing cash. Income support recipients receive part of their payment on their card with the remainder transferred to their bank account in the normal way.
Recently there has been some confusion about the two schemes. With the Government planning to add two new sites for its trial of the cashless debit card people around Australia are discussing how the card might affect their communities. Federal Member for Hinkler, Keith Pitt, has started a petition to drum up support for a trial in the Bundaberg region. When a Bundaberg newspaper asked supermarket chain Aldi whether they would accept the card, an Aldi representative initially said no. However, Pitt suspected Aldi was confusing the cashless debit card currently being trialled in Ceduna and the East Kimberley with the BasicsCard used in income management sites. He was right. Aldi have since confirmed that they can accept the cashless debit card.
The BasicsCard
The BasicsCard was introduced to support the Government’s income management initiatives. Various forms of income management operate in locations around Australia including the Northern Territory, Cape York, the Kimberley, Perth, Playford, Shepparton, Bankstown, Logan, Rockhampton and a number of remote Indigenous communities.
The BasicsCard is a PIN protected magnetic stripe card that allows income support recipients to spend their payments at approved businesses. The card works on the EFTPOS system. Cardholders cannot use the card to withdraw cash from automatic teller machines or EFTPOS terminals or to buy alcohol, tobacco, pornography or gambling products.
Only some retailers and service providers are approved to accept the BasicsCard. To get approval, a business must agree to accept a list of obligations that include not allowing people to use the card to buy excluded goods, gift cards or cash.
A common complaint from cardholders in some income management trial sites is that many retailers and service providers do not accept the BasicsCard. For example, Aldi, Bunnings, Officeworks and some government agencies.
The cashless debit card
The cashless debit card was introduced in response to a recommendation by the Forrest Review of Indigenous jobs and training. The review argued that the BasicsCard had been an effective tool but that it was ‘very expensive to deliver and unaffordable on a large scale.’
The cashless debit card is a Visa debit card. It works the same way as a normal bank-issued debit card except that cardholders cannot use it to withdraw cash and cannot use it at blocked merchants such as bottle shops.
While the BasicsCard will only work at retailers who have been approved by the Department of Human Services, the cashless debit card will work at any merchant that has not been blocked. The card provider, Indue, blocks merchants using a merchant category code (MCC) that identifies merchants by the kind of goods or services they sell. Merchants are able to accept the card unless Indue has blocked the category they belong to.
Blocking merchants by category means that it is not feasible to stop cardholders from buying cigarettes since these are available from merchant categories that are not blocked (for example, supermarkets, petrol stations and newsagents). Blocking sales of homebrew kits may be difficult for the same reason.
A major difficulty with the cashless debit card is dealing with merchants that sell a mix of excluded goods and non-excluded goods. According to Indue:
Merchants who sell Excluded Goods and Services and have the ability to prevent the sale of Excluded Goods and Services will be required to enter into a Merchant Agreement with Indue in order to be eligible to participate in the Trial and accept the Visa Debit Card.
Currently, the cashless debit card cannot automatically block purchases of individual products. It can only automatically block merchant categories and individual point of sale terminals. This means that staff at mixed merchants need to see the card, identify when a cardholder is trying to buy excluded goods, and refuse the purchase (this issue is discussed in an earlier Flagpost—‘The computer says no’: automatic product blocking for the Cashless Debit Card).
This means that the cashless debit card is vulnerable to changes in state government liquor licencing regimes. It is much more difficult to implement the cashless debit card in a state or territory like the Australian Capital Territory that allows supermarkets to sell alcohol from the same point of sale terminals as other goods. Each supermarket would need to enter into a Merchant Agreement with Indue in order to accept the card.