Disbursing payments from class action legal settlements is administratively complex and is frequently a painful process for both administrators and recipients. Paying hundreds, sometimes thousands of individuals a single time (and sometimes recurring times) in different amounts can be especially cumbersome.
Analyzing the trend of Class Action lawsuits in Canada and the US, the number of cases are increasing - between 2010-2013 a total of 42 class action motions were granted, and with $35 billion in outstanding unresolved Canadian Securities class action suits, the need for efficient payment vehicles couldn't be greater.
Let's go through the 6 ways that Class Action Service administrators and Lawyers representing corporate clients can reduce administrative burdens on the payments sides of the business, and how businesses and settlement recipients benefit from using prepaid MasterCard or Visa cards.
1. Cost Savings
The method of payment for class action suits can be cumbersome. Cheques are expensive - from administration, to issuing and clearing, to postage - there are many associated costs with issuing cheques.
Surprisingly, Scotiabank has calculated the cost of issuing a cheque at anywhere from $15-25 per cheque. In some cases where administrative overhead is high, $50 per cheque is not unheard of. Although an individual paper cheque does not cost much on its own, all the associated costs that come with issuing a cheque are significant. Distribution and payment costs such as bank charges on cheque clearing and postage, account administration, reconciliation and storage costs (filing and processing after the fact) all add up.
When you're looking at issuing hundreds and possibly thousands of cheques at any time, the burden of cost only compounds. This leads us into our second way that our payment programs can benefit you.
2. Administrative Relief
As program managers that deal specifically with many types of payment disbursements, we provide end-to-end services. This means that we work to develop your program, looking for technical solutions that work for you, getting you the necessary approvals, setting up your programs and providing ongoing support to you and your payment recipients.
This also means that once we decide how to disburse funds, we will work with you to manage the movement and ongoing reporting of the funds. Depending on the needs of your program, we can provide physical plastic Visa or MasterCard prepaid cards or provide other options, like virtual cards - disbursing payments instantly online and via email.
All of this, combined with our technical expertise, means that prepaid Visa and MasterCard payments are the savvy option for companies that are looking into reducing their manual processes and focusing on automation - leading us into our next two benefits.
Prepaid payments is a smart technology - long gone are the days of using paper to issue money, writing and printing cheques manually, having to keep track of where money is and who is spending it. Picture it like this - a lawsuit is filed and you need to register all the possible claimants, so they register on a website. Integrating with us means that the website form capture setup is essentially the last step in the entire administrative process. Integrating with our systems means that we can issue a payment, with the value you've allotted, directly to that individual, without anymore work on your end.
Integration means that our systems will communicate seamlessly with your systems, and reduce the amount of administrative work done by your team. Additionally, with all of this integration, you get the additional benefit of payments reporting.
You might remember a time when disbursements were given out with paper vouchers, paper cheques or even EFT, and during this time, you had to manually keep track of where funds were sent. Sometimes recipients may have even been paid multiple times, or never even received a cheque.
With prepaid Visa or MasterCard payments, every dollar that is spent, every individual that is paid, and every card issued is tracked. Every month you will receive a Master Client Report (MCR), outlining exactly what disbursements have been made, to whom, and when. This ensures you have complete visibility into your payments program, and payments recipients have complete access to the funds they are entitled to. No more lost cheques and customer service nightmares.
We also have functionality that allows you to see where cardholders are spending their funds, in anonymous aggregate, for additional visibility.
5. Privacy and Safety
We've touched on this briefly already, but the added benefit of privacy, and the safety of prepaid payments, cannot be stressed enough. Prepaid Visa and MasterCard cards are protected on multiple levels, and this protection in turn leads to consumer confidence, as well as increased consumer privacy. There is no need to collect private banking information for EFT transfer, which can be a difficult process to track. Handling thousands of bank account numbers is a burden that is easily avoided.
Prepaid cards have Visa and MasterCard Zero Liability Protection - meaning cardholders receive 100% of their funds should their cards be found to be used fraudulently. Your clients will feel comfortable knowing that their money is secure and protected.
6. Competitive Advantage
There was a time when the combination of EFT, wire, and cheque issuance dominated the payments industry. Now that these methods have become more costly and inefficient, prepaid payments are quickly becoming a simple alternative.
Whether you are a lawyer seeking Class Action Services, or a corporation on the administrative side, having a prepaid payment solution not only will please your payment recipients, but save you time, cost you less, and make you stand out from your competition.
Got questions? Contact us to learn more!