Cards And The Platform, Beyond Corporate Payroll

We all know that paper-based processes are inefficient at best, error-prone at worst. When it comes to getting, workers paid, such shortcomings can have an outsized effect, as checks can get lost or never cashed.

The environment for the adoption of prepaid cards in a payroll setting is a mixed one. On the one hand, employees and employers see a streamlining of process and tracking. Loading salaries onto cards and giving those cards to employees can cut down on the costs of working with manually creating and printing (and sometimes mailing) checks. A Visa study has found that as many as 86 percent of employees would in fact prefer to be paid with a payroll card than they would a paper-based check.

But in some cases, such as in New York, regulations have governed how those cards can be accessed (such as via mandated ATMs that must not take fees and must be near the workplace or workers’ homes), because of the unbanked workers who use them.

But beyond the disputes over fees, the fact remains that as significant number of workers in the U.S. are unbanked, and payroll cards may be an option more desirable than going the check cashing route.

In one example of continued payroll card adoption, payroll and corporate prepaid card solutions provider Cardplatforms said that it had extended its relationship with Netchex, an HR and payroll provider to manage the latter’s payroll card program.

In an interview with PYMNTS, Jeff Foster, CEO of Cardplatforms and a cofounder, said that payroll cards have potential in a country where as many as 30 million individuals are unbanked. And, he noted, millennials are a demographic that has not embraced traditional banking relationships, with relatively higher comfort levels with prepaid services. And, he added, of employers and employees alike, “nobody wants someone else to stand in line at the liquor store to cash a check.”

Beyond the payroll card space lies opportunity for corporate cards geared toward expense management, said Foster. The space was created years ago in part by big banks, he noted, but as time went on these financial giants spent less time on the offerings, with short-term holdovers on cash and no way to make money off the interest expense garnered from what is known as the “float.”

With the larger players stepping back from the arena, said the executive, corporate expense cards can become an offering of smaller, technology-oriented firms such as Cardplatforms, and can be extended to embrace any manner of payout, from government benefits to lawsuit settlements. Instant issuance cards can cover a variety of uses, to control expenses, say for travelling employees, where amounts come preloaded (and do not have to reimbursed) and as Foster noted, can be restricted to not be used, at for example, certain locations, or in other means of control at the corporate level, can be check at the back office, to approve certain expenses.