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Payment card for refugees: This is how it works

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Payment card for refugees: This is how it works

The payment card should also be accessible via smartphone. Nathan Dumlao/Unsplash

Asylum seekers in Germany are set to receive payment cards later this year. The prepaid cards enable you to receive government services without a checking account. Some municipalities, such as the Greiz district, already offer prepaid payment cards for those in need of protection.

Payment cards for asylum seekers in Germany are to be introduced later this year. In 2023 alone, 351,915 people sought refuge in Germany and applied for asylum, according to the Federal Office for Migration and Refugees. In the future, these people will be able to receive state benefits in Germany using a so-called payment card. Business Insider explains what the difference is to a checking or credit card.

Why is a payment card needed for asylum seekers?

State institutions in Germany ensure adequate care for those in need of protection. However, most asylum seekers do not have a checking account to be able to receive the assistance. For a long time, the state resorted to cash payments, vouchers or benefits in kind. However, for most municipalities, coordination was both time-consuming and personnel-intensive. In addition, recipients have not previously been able to make online purchases – the payment card is now set to change that.

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What exactly is the payment card for asylum seekers?

The payment card is a prepaid card that can be topped up with credit. There is no need for a bank account from which the sales are debited – unlike a debit or credit card. However, the payment card can be linked to an account if necessary. The prepaid payment card can be topped up via bank transfer.

What are the differences between a prepaid card and a checking or credit card?

Prepaid payment cardDebit cardCredit cardCan be used/issued without a bank account YesNoNoCredit line available NoNoYesTop up credit by transfer/depositYes YesYesAvailable as plastic card and digital YesYesYesCash withdrawal YesYesYesSource: Mastercard

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However, there should be further restrictions for the payment card for asylum seekers. This emerges from the official tender, which 14 of 16 federal states shared:

The card should not be used abroad. No card-to-card transfer should be possible. Although online purchases can be made, online purchases outside the EU should be excluded if possible. Cash withdrawals should only be possible domestically and for a previously defined amount. There will also be other additional functions: For example, federal states can determine whether the map is only activated in certain regions.

Payment card in Thuringia since December 2023

In Germany, some municipalities already offer a prepaid payment card for those in need of protection, for example the district of Greiz in the state of Thuringia. Since December 2023, asylum seekers have been receiving their assistance there using a prepaid Mastercard instead of cash. The implementation took place together with the Munich company givve.

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The Saxon district of Leipzig is also planning to issue benefits in kind via the Mastercard prepaid payment card, which is issued by PayCenter, from the second quarter of 2024. It offers asylum seekers benefits in kind instead of cash.

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