The German parliament, the Bundestag, passed contentious legislation on Friday authorizing the issuance of payment cards to asylum seekers and refugees for the distribution of state benefits.

The nationwide legal framework was approved following a conference between Chancellor Olaf Scholz and the state prime ministers in November last year, during which 14 out of the 16 federal states reached a consensus on the prepaid payment system. The Green party had initially opposed the payment card system, citing concerns about its potential discriminatory effects and impact on the integration and welfare of asylum seekers and refugees in Germany. In response to the Green party’s concerns, the federal cabinet revised the legal basis, leading to the final agreement, which was reached this Friday.

Instead of receiving cash directly from their respective municipalities, refugees and asylum seekers will now utilize a standardized payment card for all necessary purchases. This eliminates the need for municipalities to handle cash directly, thereby reducing their administrative burden. Instead, funds will be transferred directly from social authorities to banks. The introduction of the payment card serves the purpose of regulating and curbing the transfer of state aid to countries of origin. This encompasses payments to smugglers, as well as family and friends abroad. The primary aim is to combat human trafficking and reduce the attractiveness of Germany as a destination for irregular migration.

During the implementation process federal authorities will exercise discretion in determining the amount of money cardholders can withdraw as well as the timeframe for such withdrawals. This is meant to empower federal authorities in tailoring state aid on an individual basis, effectively expanding the Asylum Seekers Benefits Act with an option for prepaid payment cards. While the monthly amount of state aid will be determined at the state level, cash withdrawals will be limited to 50 euro.