Payroll Debit Cards Gain Traction Among Local Businesses and Financial Institutions

Strategic Insights -

Payroll debit cards are on the verge of significant growth in the US, driven by the marketing efforts of third-party transaction processors and ATM drivers to small and mid-size financial institutions. According to the American Payroll Association, less than 4% of 3,381 responding employers offered payroll cards to their employees, indicating a vast untapped market. Local employers, particularly those with fewer than 1,000 employees, are a natural target for small and mid-size banks looking to offer payroll card programs.

Key Takeaways:

  • Employers can save approximately 20 cents per employee payroll distribution by using stored-value cards instead of paper checks.
  • Unbanked employees save an average of $25 per month through the elimination of check-cashing fees.
  • Major transaction processors, including First Data Corp., Fiserv Inc., Metavante Corp., and Genpass Inc., are marketing payroll cards to local financial institutions.
  • Fiserv's PayCheck Plus PDQ program can launch a payroll card program within several days and offers free use of a participating local bank's ATMs.
  • The PDQ program allows local financial institutions to hold deposited funds and charges a standard, undisclosed transaction fee paid by the employer.
  • More than half of PayCheck Plus transactions are ATM withdrawals.
  • The program gives local banks a competitive edge to attract new depositors.
  • Genpass Inc. is using its ATM-driving business and proprietary MoneyPass surcharge-free ATM network to market its payroll card to local banks.
  • Florida Citizens Bank has signed up to offer the Genpass Paycard to local employers, allowing employees to access their pay surcharge-free through MoneyPass ATMs.

Statistics:

  • 3,381 employers responded to the American Payroll Association employer study.
  • 4% of responding employers offered payroll cards to their employees.
  • 50% of surveyed employers have fewer than 1,000 employees.
  • 8.1% of surveyed employers employ more than 20,000 workers.
  • 43% of surveyed employers said one-third of their employees are underbanked or unbanked.
  • Employers can save approximately 20 cents per employee payroll distribution using stored-value cards.
  • Unbanked employees save an average of $25 per month through the elimination of check-cashing fees.
  • 25,000 ATMs are part of the Allpoint surcharge-free network.
  • 9,800 credit unions in the US are among the thousands of financial-institution clients of FSV Payment Systems.
  • 25 banks have issued 40,000 cards in Fiserv's PayCheck Plus program.
  • Fiserv expects 500,000 PayCheck Plus cards to be issued within the next eight months.
  • 63 Florida Citizens ATMs are part of the MoneyPass network.

Sources:

  • American Payroll Association
  • First Data Corp.
  • Fiserv Inc.
  • Metavante Corp.
  • Genpass Inc.
  • Florida Citizens Bank
  • Card Forum
  • Thomson Media Inc.