Cash is a general no-go in prison, with inmates required to use funds and wages deposited into accounts to pay for commissary items. Prisoners also can resort to de-facto forms of currency that typically include postage stamps and packs of ramen or fish (desired because of their relatively high protein counts, especially useful for weightlifters). Cigarettes are on their way out — tobacco bans in prison have reportedly severely reduced the use of those items for trade.
Now, though, mobile and other forms of digital payments are making inroads into penitentiaries around the world. And that’s not only for money going into prisons to help inmates purchase toiletries, foods and other products. The emerging trend also applies to funds going out of prisons — disbursements from prisoners who sometimes send home some of their wages for birthday gifts and other uses. The spread of digital payments within the world of prisons, however, is not without fraud.
China Efforts
The latest development comes this month from China.
There, all types of consumers are, of course, tightly tied to mobile ecosystems such as WeChat and Alipay, as PYMNTS has documented. The use of cash in that country is, in fact, on the path to obsolescence. Mobile payments in China reportedly hit $17 trillion in 2017, with Alibaba’s Ant Financial affiliate and Tencent’s WeChat Pay emerging as the leaders in the country. And last year, the People’s Bank of China found 602 instances in which merchants refused to accept cash.
Prisons and prisoners are hardly immune to the larger trends of society, and that includes payments and commerce. And that’s the backdrop for the recent announcement by Beijing Prison that, according to the South China Morning Post, “that it had added Alipay to the online payment services families of prisoners can use to deposit money for inmates, for digital shopping or payment of medical expenses.” The move follows the September 2018 announcement that the prison started to let relatives of prisoners transfer money to inmates via WeChat.
For the Alipay program, prisoners’ relatives can send as much 1,000 yuan (about $150) per inmate. Inmates have digital wallets, which can have up to 5,000 yuan (about $740) in them. The service reportedly is free.
Reducing Corruption
So how do those inmates shop?
According to the Morning Post, they “can shop through an intranet platform by scanning their prisoner code and using the money in their accounts to make purchases. The prison has set up interactive devices enabling the prisoners to do their shopping.” The report also said that “the move was part of a bigger scheme for penal facilities in China to go digital, in a bid to prevent corruption by strengthening their financial management, especially in the area of procurement.”
UK Disbursements
Other prisons also have adopted digital payments in China — and in other parts of the world. U.K. prison authorities, for instance, are involved in an ongoing process to upgrade digital payments going both to and from prisoners.
Among the hottest trends in the larger world of payments is digital, efficient and quick disbursements — recent PYMNTS research, in fact shows in data-driven detail that there is no shortage of FinTech players and other technology providers that are more than willing to help consumers get paid faster.
That trend in playing out in U.K. prisons.
Starting a year ago, authorities there began testing a program that sought to replace the paperwork-heavy process of prisoners sending funds to outside parties — prisoners have children and spouses, after all — in favor of a quicker digital process. “Processing time was reduced by several days, and there were no more postage costs for prisoners,” reads a summary of that effort from the U.K. government. The pilot has since been expanded to nearly 20 prisons, with the goal of cutting five to seven more days off the processing time for outgoing disbursements. Authorities say those disbursements normally take up to two weeks.
Less Paperwork
The test involved multiple complex bureaucratic steps, but the gist of the program is this: While prisoners still need to fill out a form to request an outgoing disbursement and have it approved, and still must have their identity authenticated by staff, prison “staff only needs to upload the prisoner details into the new digital tool and click to send the payment request directly to the business support service. The support service then would download and process the request, then send out the money.”
By contrast, the existing process involves numerous paper- and manual-based activities and steps. “Speaking to both prisoners and staff, we saw the process of sending money to friends and family was lengthy, expensive and involved paper-heavy admin, which took up valuable prison staff time and effort,” prison authorities said. “We recognized this as an opportunity to simplify and to make the process more secure and economical.”
Of course, prisoners being prisoners, one can expect a certain level of fraud when it comes to digital payment systems designed for inmate use. That was the case last year in the U.S, when the JPay service — an electronic payment, financial services and communication system designed specifically for use inside prisons — was hacked by inmates in Idaho, who reportedly ran up more than $224,000 in improper credits to their prison accounts.
Nothing’s perfect, of course, whether in the outside economy or inside prisons. But these developments show that digital payments and disbursements are indeed making their way into some of the most secure — and most undesirable — places in the world.
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