This story ran on nwitimes.com on Thursday, October 26, 2006 7:42 AM CDT

Those out of work in Indiana and collecting unemployment benefits will get a new Visa card courtesy of the state starting next month.

The card will be a Visa prepaid debit card issued by National City Bank, of Cleveland, and can be used at stores, ATM machines and banks to collect unemployment benefits.

"It's all about making the system more efficient and customer-focused," said Joe DiLaura, a spokesman for the Indiana Department of Workforce Development.

Unemployment recipients started receiving mailings telling them how to use the new card last week. The department's online unemployment claims filing center also has information on how to use the card.

Indiana will be one of the first states to use debit cards exclusively for collecting unemployment benefits. The first debit cards should go out in mid-November, DiLaura said.

Unemployment checks, which currently are mailed weekly to the unemployed person's home, will become a thing of the past once the new system is fully up and running, DiLaura said.

The card comes with a schedule of nine separate fees that can be charged for everything from withdrawals at bank teller windows to international transactions. The highest fee is $15 and is charged for expedited card delivery.

But recipients will never have to incur any fees if they are savvy about its use, DiLaura said.

That is because recipients will get one free withdrawal with each deposit, usually weekly, at any participating bank ATM or a Visa Member bank teller window. About 95 percent of Indiana banks are Visa Member banks, according to DiLaura.

After the one free withdrawal, a fee of $1.25 will be charged for each additional withdrawal. Free withdrawals not used will accumulate and can be used in subsequent weeks.

There are 600 ATM machines at which recipients can make their one free withdrawal per deposit. The participating institutions are National City, Old National, 7-Eleven, Alliance One and MoneyPass. Alliance One includes virtually all credit unions in Northwest Indiana.

In addition, the card can be used for purchases at stores that accept Visa, just as you would use a bank debit card. Many stores also will allow use of the debit card for "cash back" along with a purchase.

Affiliated Computer Services Inc. (ACS), of Dallas, has the contract for managing the system and establishing a customer service call center in Gas City, Ind. ACS is making its money on the deal solely from point-of-sale fees paid by merchants, DiLaura said.

Such fees range up to 3 percent of the total cost of a purchase and are paid by merchants to credit card and debit card companies. Merchants pay the fees because they want credit card and debit card customers.

The Indiana Department of Workforce Development estimates the new system will save the state $1.8 million annually.

Last year, the state gave out unemployment benefit payments totaling $654 million to 248,077 people. The average payment per claimant per week was $274.

Technical problems have plagued other state programs recently when they were switched over to new computer systems or digitized customer service. The Bureau of Motor Vehicles suffered a near meltdown of some services over the summer, which resulted in long delays in getting driver permits and other documents.

For the unemployment claims using a Visa debit card, the state is running a pilot program in the Indianapolis area to work out any glitches, DiLaura said.