ACCESSFI
Access Financial

Financial Inclusion – Payroll Cards For Unbanked Employees

Background:

This case study explores the implementation of payroll cards as a business solution. ACCESS Financial (Company) identified a growing market opportunity in the prepaid card sector. The company researched small community banks and credit unions (FI’s) with limited financial and human resources to launch a prepaid card program and found that these institutions were not able to offer their business customers a solution to help reduce payroll service costs by replacing paper checks with payroll cards. The aim was to reach out to the FI’s to assist them by providing a turn-key solution that would modernize their customers payroll process, reduce administrative overheads, and empower unbanked employees with a more convenient, cost effective, and flexible financial solution.

Objectives:

1. Establish a partnership with a major channel partner to reach FI’s nationally.
2. Launch a prepaid payroll product that offers employees financial inclusion, convenience, and the ability to share funds with family members locally or around the world.
3. Acquire 100,00 active cardholders within the first 2 years of operations.
4. Assist Employers in reducing time-consuming and costly payroll processes.

Challenges:

Before implementing prepaid payroll cards, the Company faced several challenges.

1. Market Reach: Finding a conduit to reach FI’s on a national basis in a timely manner.
2. Financial Institutions: Demonstrating that the solution was a viable opportunity to assist their business customers, as well to potentially bring on new business accounts.
3. Employers: Educating employers how to change their traditional processes for payroll.
4. Employees: Bringing financial inclusion to the unbanked/underbanked segment of the population, explaining how to save money by eliminating check cashing fees and other tools to assist with their everyday financial needs.
   
   

Solution:

The Company developed a prepaid card program that allowed employers to transition from costly paper checks using its payroll card, onboarding, and tracking solutions.

Strategy and Implementation:

1. Distribution Channels: The Company formed an alliance with a nationally recognized merchant processor, co-marketing the payroll card solution to its merchant FI’s.
2. Program Development: The Company developed a new co-branded payroll card program providing FI’s with a turn-key solution to take to their customers.
3. Enrolling Employees: The Company built an onboarding portal to allow employers to easily upload employee information, order individual or bulk cards, and track delivery of those cards to employees for activation.
4. Communications: An extensive communication campaign was created to assist employers in educating employees on the benefits of the program. Information sessions and training were provided to ensure a smooth transition from paper to plastic.
5. Card Features: The payroll cards offered features such as online account access, bill payment, cost savings (eliminating check cashing fees and reduced remittance fees), a mobile app to check balances and transactions, and the ability to shop, dine, and travel, using their card online or in person at millions of locations around the world.

Benefits:

The implementation of the payroll program brought several significant benefits to the FI’s, their business customers, and their customers employees.

1. Employer Cost Reductions: Eliminating check printing and distribution, as well as the cost of replacing lost/stolen checks lead to substantial savings for the employers.
2. Efficiencies: The new systems reduced the time spent on payroll administration.
3. Employee Satisfaction: Employees appreciated the convenience of immediate access to their earnings on payday, as well as the cost savings and convenience in using their card for everyday purchases.
4. Incentives: Beyond the payment of payroll, employers also enjoyed the convenience of being able to use the same cards to disburse incentives, commissions, and business travel expenses. Incorporating these payments into the process dramatically reduced administrative costs and allowed for timely reimbursement to their employees.
5. Revenue Share: The FI’s enjoyed a new revenue stream from card transitions, with no additional operating costs.

Results:

The introduction of the program successfully improved employer operating efficiencies as well as reduced operating costs and improved employee morale. The FI’s enjoyed the benefits of a new revenue stream without any overhead expense, as well as the opportunity to offer a new service when soliciting new and existing business accounts.

Conclusion:

This case study highlights how prepaid payroll cards can serve as an effective business solution for modernizing payroll processes, reducing costs, and improving the financial well-being of employees. The shift to prepaid payroll cards brings greater efficiency and satisfaction to both employers and their workforce, making it a viable solution for the businesses facing similar challenges.