Paycard Overview

Payroll professionals are keenly aware of the inherent benefits of deploying an electronic pay program within their organization. Upon doing so, their employer can save money and resources associated with payroll processing and distribution costs while employees benefit with the peace of mind of knowing that their wages are accurately and consistently deposited into their personal bank account. In fact, it is estimated that companies save up to $3.00 per payment by using direct deposit instead of paper paychecks.* This is why employers over the past 25 years have promoted direct deposit to their workforce, achieving a 65% direct deposit participation rate nationwide.

The 'Unbanked Employee' Problem

However, for employers whose workforce contains a high percentage of individuals without bank accounts, it is difficult to achieve the desired level of participation in direct deposit programs. Employers with higher percentages of employees without bank accounts tend to be those in the agricultural, food processing, hospitality, manufacturing, retail, restaurant, and transportation sectors of our economy. These workers are frequently called the unbanked by employers and the financial services community and represent about 10 million households in the United States.

The Paycard Solution

In response to the employer community's desire to find a practical method to pay unbanked workers electronically, Global Cash Card has developed payroll debit card (paycard) products and services as a cost effective way for payroll professionals to electronically pay their population of unbanked workers.

Celent Communications, a consulting and research firm that focuses on technology in the financial services industry, estimated that 10% of unbanked households were using payroll debit cards at the end of 2002. This figure was almost zero in 1998. Projections are that 25% of unbanked households will be using payroll debit cards by 2009 which represents over 14 million paycards and over 27 billion in spending.

Employer Sets Up Paycard Accounts

Paycards operate in a manner similar to traditional PIN-based debit cards that are linked to a checking and/or savings account held by individual consumers at any given financial institution. The primary difference between these two types of cards is that an employer establishes a banking relationship with one specific financial institution as opposed to the unbanked employees doing so on their own. Once the employer creates a paycard account for the purpose of paying wages to their unbanked workers, the employer issues paycards to these employees and begins to electronically deposit, or load, wages into the paycard account every pay period.

ATM/POS Access Available

Workers who participate in their employer's paycard program can then access their wages via an ATM or by using the cash back feature available at many point-of-sale terminals within retail establishments throughout the country. Unbanked employees can also use their card and chosen PIN to purchase goods and services and, if their employer issues branded paycards (cards issued with a MasterCard or Visa logo), employees can use their paycards to make signature-based (off-line) debit card purchases.

Should the employment relationship between the employer and the worker with a paycard cease, the worker still has access to any funds on the card and can have his/her next employer direct deposit to the card.