JPay sells itself as a private company “helping friends and family of inmates stay connected to their incarcerated loved ones through a variety of corrections-related services” Its principal service is the processing of electronic money transfers; however, through its JP4(R) Player, it offers emails, music downloads, games, and video visitation for substantial fees.
JPay claims its electronic money transfers are quicker, more efficient and more security than the system of the past, which often involved loved ones sending money orders through the mail. Yet the fee associated with this was traditionally around $3.00. Under JPay, it is north of $7.00. Furthermore, the fees administered by JPay can reach as high as 35% to 45%.
Why are JPay’s fees so high? Not because it holds a relatively small share and cannot compete with the economics of scale of larger businesses in the industry, but because it maintains a quasi-monopoly over the industry. JPay provides money transfers to more than 70% of the incarcerated persons in U.S. prisons - approximately 1.7 million individuals. More pressingly, nearly 400,000 people are imprisoned in states where there is no “free deposit option”.
There are, however, cheaper competitors within this industry, many of them charging fees closer to $3.00 or 4 or 5 percent. So why does JPay maintain its monopoly despite their presence? In short, states often receive between $0.50 and $2.50 for each payment the company accepts on behalf of their incarcerated persons. This “profit sharing” system is critical to the success of JPay.
Aside from profit sharing, JPay also linearizes the payment transfer system, allowing various Departments of Corrections to deduct fees and charges before the money hits an incarcerated person’s account. Such charges include: court fees, booking fees, intake fees, and in some cases a fifteen percent for mandatory savings account.
Finally, as governments increasingly shift the costs of imprisonment from taxpayers to the families of those imprisoned, money is needed to pay for basic needs like toothpaste, visits to the doctor, winter clothes, toilet paper, electricity, and even room and board. Thus, JPay offers an efficient electronic system that funnels money into the system.
There are, of course, other, less supported, explanations behind JPay’s success, including that it has deliberately hampered the money order system in the situations in which it handles them, or that it has practiced questionable lobbying practices. These explanations, even if true, are secondary to the ones discussed above.
Ultimately JPay adds an undue economic burden upon those who are most vulnerable in our society, thereby helping to perpetuate the poverty-prison cycle. Furthermore it has exploited a situation in which people are increasingly financially responsible for their own incarceration or that of their loved one. Despite the marginal benefits of its electronic system, JPay overall constitutes yet another harm to our already dysfunctional corrections system.
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