Historically, the most commonly used method to distribute grant payments has been either cheques or online bank transfers, often generated through scheduled payments.
But as we increasingly immerse ourselves within the new era of digitalisation, the need to simplify the process of grant payments is becoming ever more prevalent. Grantors require an easy process of payment handling, and the grantees desire a reduction in the risks associated with cash management. The use of prepaid cards is the answer to this demand.
Prepaid cards are issued preloaded with funds, holding a specific value and used to make purchases up to the amount stored on the card. Hence, they offer a new and revolutionised way to provide and access grant payments. This is a particularly innovative avenue for comparatively small grant award amounts, intended for a one-time payment to a grantee. Using this medium for grant payments comes with huge benefits…
For grantors, this
- Reduces the time and cost of presenting customers with their grant awards.
- Offers a grant payment solution that is fully tailorable around the individual needs of an institution.
- Increases the control and security of outgoing payments.
- Enables a personalisation that strengthens standing and trust with customers.
- Improves customer satisfaction and loyalty.
For grantees, this
- Produces the safest and fastest way to make a purchase, from the point of sale and through e-commerce.
- Offers greater convenience than the awkward and risky process of carrying cash and using cheques.
- Enables funds to be easily tracked, managed, and reconciled with cash transactions.
- Provides a streamlined and effective customer experience.
- Keeps funds protected if a prepaid card is lost or stolen.
Optimising this solution for Grantors
Leveraging a CRM and ECC system* to aid grant payments makes it possible to meet the pressing needs of grantors and grantees through the prepaid card option, as well as existing processes. This solution allows the automation and streamlining of every logistic arrangement included in the grant payment processes:
- An automated and complete management of the business process flow is created, beginning with a grantee application and ending with grant closeout.
- All details are stored, protected, replicated, and updated with CRM in each department, including the Contract Account, Business Partner, billing, invoicing and payment documents.
- Data is easily identifiable, trackable and accessible by authorised personnel using this mode, even if the payment run is executed using multiple payment methods.
- Flexible for organisation’s needs. The solution can be integrated with the current methods of cheque and bank transfer payment.
- The payment method for every country of payment is always maintained.
Parts to watch!
Prepaid cards undoubtedly provide remarkable flexibility and ease of payment handling for the grantee and the grantor. However, there are a few points to consider:
The importance of data input. The finance team must ensure that the correct amount is uploaded onto the correct pre-paid card. Like checks and bank transfers, any changes to the grant amount, once it is preloaded, can be difficult.
- Handling repayments: Currently, the repayments of any unspent grant amount by the grantee will still need to be handled via the existing cheque or online bank transfer methods.
- Log of grantee expenses: With this approach, there will be no third-party record, as in the case of bank statements.
- Fraud risks remain: This is due to the lack of verification with external banking details and previous transactions. These actions would help to analyse the creditability of the grantee and the deciding parameters for the grantee authenticity.
- Card supply cost: The grantor will need to pay the card-issuing organisation for the cost of cards to be produced and delivered.
Prepaid card payments are a developing necessity for organisations and individuals in the new digitised era. Every new technology poses some challenges and will have certain limitations. However, the technologically developing world can be harsh on companies that are left lagging behind the times. Though this mode of payment has a few encumbrances, it remains an innovative process, where, with the limitations acknowledged and handled, is likely to be increasingly used as an efficient method for all types of grant payments.
*The systems: CRM – Customer Relations Manager. ECC – ERP Central Component. (ERP – Enterprise Resource Planning).