A recent article “Why Banks Shun 30 Million Americans” makes the case that banks are uninterested in the unbanked and underbanked customer and that mega-retailers don’t offer much long-term value.
New federal regulations have impacted the banking industry’s business model of subsidizing once “free” services, driving banks to focus on “profitable” customers while discouraging others with higher fees on basic banking services.
Big retailers have stepped in to profit on the unbanked by charging fees to cash checks and by selling prepaid debit cards. Retail fees charged for these services, when added up over time, can be just as high as maintaining a checking account.
Yet one of the best solutions for the unbanked and underbanked was not discussed at all: Employer paycards. Unlike retail prepaid cards that carry load and usage fees that make it profitable for retailers to sell them, employer paycard programs offer all the benefits with much lower costs.
For example, our employer paycard program is a completely free service to employers, with no contracts; no set up fees; no card fees and no minimum number of cardholders. Employers can lower expenses associated with “paper” payroll and mandate direct deposit while complying with all "pay without discount" regulations. Our full deployment program meets state regulations and provides cardholders with a Visa paycard with:
In fact, our cardholders can realize all the benefits of having a paycard and not incur any fees.
Given that every legal US resident qualifies - banked, unbanked and credit-challenged employees are starting to take the initiative to find and introduce paycards to their employer.
We encourage employers and employees alike to pilot our Visa paycard.