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Australia trialling product-level blocking tech for cashless welfare cards

In 2016, the Australian government introduced the trial of a welfare quarantining system, via a Cashless Card (CDC), that aimed to govern how those in receipt of welfare spend the money, with the idea being to prevent the sale of alcohol, cigarettes, and some gift cards and block the funds from being used on activities such as gambling.

80% of the recipient’s funds are placed on the CDC, which is managed by Indue, with the remaining 20% to be paid into a bank account.

The Cashless Debit Card is testing whether reducing the amount of cash available in a community will reduce the overall harm caused by welfare-fuelled alcohol, gambling, and drug misuse.

There are currently 12,150 participants in the CDC trials across Bundaberg and Hervey Bay, the East Kimberley, Ceduna, and Goldfields regions, the Department of Social Services revealed during Senate Estimates on Thursday night.

To date, the government has spent a little over AU$50 million on the trial.

The government in December 2019 kicked off an AU$3.4 million pilot of product-level blocking with tech vendor DXC Technology.

The pilot is aimed specifically at assisting small businesses. Major retailers like Australia Post already automatically block purchases.

Known as product level blocking, the business’ PIN pad would recognise when a CDC is being used and automatically decline the transaction if the shopping basket includes restricted products. This is only at the end of the transaction, however.

As department spokespeople confirmed, these blocks can be overridden by the retailer, so the onus is on them to not let someone with a cashless debit use the funds for booze.

Generally, product-level blocking involves upgrading a merchant’s pin-pad and POS system to automatically identify CDC and block the sale of restricted items, the spokesperson of the Department of Social Services told senators.

It does this by upgrading the point of sale system so it can scan a customer’s basket for restricted items and if any restricted items are present, the pin-pad will decline the payment request.

The government department is working with pin-pad providers and point of sale system providers on the best way for those restricted items to be identified, but generally, the approach that seems to work best is the classification of products into different departments, which many merchants already do.

During the period spanning August 2016 through October 2019, 12 outages were preventing the use of the CDC. There was also a Telstra outage that affected all Eftpos terminals, not just the CDC, which prevented people on the trial from accessing their funds.

One of the issues currently being examined is whether there could be greater support for internet connectivity in communities. The greater functionality of the card allows people to better manage their accounts online, they can use it for online shopping and the like and therefore connectivity is much more important to allow people to use the full-functionality of the card.

The government has also pushed plans from extending the trial into the Northern Territory and Cape York from April to July 1. It has committed AU$17.5 million to transition people from the current Basics Card to the CDC, providing legislation passes.

The Basics Card has half of an individual’s welfare payments and is touted as helping those on “income management” to manage their money. It is accepted at around 15,500 stores and businesses, but not everywhere, so card users sometimes have to travel to inconvenient locations just to use it.

The CDC is more freely accepted at several merchants, around 900,000 merchants, the Basics Card is accepted in around 16,000 Australia-wide. There are some differences in the restricted items and for the CDC; it can be used online as opposed to Basics Card, which is not.

The department said there are currently 25,231 recipients on income management that will be transitioned to the CDC.

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