More employers are seeking to create disaster preparedness plans in the wake of 9/11 and Hurricane Katrina. Yet many may have heard or seen first-hand how hard it is to disburse funds during major disasters. For that reason, the financial industry issues prepaid disaster relief cards.
"A business has to function once a catastrophe hits; whether it's big or small, they need employees on the ground," says Kirsten Trusko, senior manger in the banking practice at BearingPoint, a management and technology consulting firm in Virginia. Workers need to have quick and easy access to funds, she adds.
A disaster relief card is a prepaid bank card that acts as an electronic checking account with a personal identification number. Card networks have evolved over the last couple years and have features that cash and checks don't have.
After Hurricane Katrina, some employers had funds in the bank, but could not print paychecks. Prepaid cards helped ensure employees had access to pay. Furthermore, employers can designate certain merchant codes to allow or disallow for the cards' use. For instance, the cards can block the purchase of alcohol, adult entertainment, gambling and guns.
Leading by example
The American Red Cross, the nation's leading disaster response agency, first provided its workers with a disaster relief card about three years ago. It partnered with JP Morgan and MasterCard Worldwide for card support services, which include accelerated card production in time of need and coordinating with retailers to make sure ATMs are funded in distribution areas, as the cards sometimes are issued in a disaster environment with limited or no connectivity or communications.
"Most of our workforce routinely goes out on two to three disaster relief operations a year," explains Michael Brackney, manager of client services program development at the American Red Cross. "Prior to the cards, we were using checks. But for a volunteer from Iowa going to a hurricane relief effort in Florida, trying to cash a paper check from a Chicago bank, that was problematic."
The 125-year-old institution has saved a lot of money using prepaid cards because it no longer has to put staff in the field to assist with paperwork and audits, Brackney notes. Using prepaid cards requires only a handful of workers to issue and monitor the cards. Fraudulent or inappropriate card use has not been an issue.
Broader reach
Jim Dean, senior manager in the insurance practice at BearingPoint, says, "Some large organizations are providing the cards to their employees for expenses they may incur on the behalf of the business during the actual catastrophe to help rebuild the operation." The Small Business Administration may consider providing disaster relief cards to small employers for temporary business operation after a catastrophe, Dean adds. Insurance companies also are issuing cards, so small businesses don't have to depend on banks or wait for a check to clear, Dean notes. The card can supplement temporary business interruption insurance and help underwrite immediate repairs to the business operation and temporary location for business.
Laura Neill, an HR administrative assistant for Mississippi-based St. Dominic-Jackson Memorial Hospital, comments, "We have to remain flexible because you don't know who is going to be able to make it in, and you don't know who is going to need what resources, so you have to be able to act really quickly" after a disaster. - L.C.B.
