A payroll card is a prepaid debit card that account balances are electronically deposited to by employers. It offers features similar to checking accounts and debit cards, such as the ability to make purchases, withdrawals, and transfers. However, there are some key differences between payroll cards and other types of financial products. For one, it typically does not offer overdraft protection, meaning that account holders cannot spend more money than they have deposited. In addition, many providers charge fees for things like balance inquiries and customer service support.
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Data for today’s episode is provided by Mercator Advisory Group’s viewpoint– The Evolution of U.S. Payroll Cards in the 21st Century.
3 key payroll card takeaways each for employers & employees:
- For Cardholders (employee): sign up process needs clear disclosure beyond the legalese of terms and conditions
- For Cardholders (employee): easy access to information such as account balances so cardholders know their spend
- For Cardholders (employee): product features must meet cardholder needs – mobile apps, budgeting features, etc
- For Program Designers (employers): managers must be able to explain how the program works in plain language
- For Program Designers (employers): managers must act as front line customer support for employee cardholders
- For Program Designers (employers): managers must implement ongoing checkpoints to see if the program needs adjustments
About the report
Mercator Advisory Group’s new research report titled The Evolution of U.S. Payroll Cards in the 21st Century provides an analysis of the payroll card market that includes its size and a forecast of its growth, an review of how the payroll product line has evolved, and a discussion of the stakeholders.
Mercator Advisory Group’s forecast report identifies the demographics of payroll card users and explores survey data revealing that they are not as homogenous as they might seem. The report discusses the attributes that consumers desire in a payroll card as well as the attributes employers seek in a payroll card program. The report reviews some of the changes the payroll card market has undergone in the last several years as it evolves to meet the needs of its changing consumer base.
Additionally, the report looks at the ever-changing regulatory environment for payroll cards, which varies by state. While some controls are necessary, payroll programs face compliance risks at both the state and federal level that demand continual awareness of regulatory changes.
“The payroll card is a unique product that can save its users money in a way that makes money for providers, which means that it can help a large number of people, including some of the most financially vulnerable. Persons with incomes exceeding $100,000 also find today’s payroll cards appealing,” commented C. Sue Brown, Director of Mercator Advisory Group’s Prepaid Advisory Service, and author of the report.
This research report has 19 pages and 9 exhibits.
Companies and other organizations mentioned in the report include: American Express, Careington International, Consumer Financial Protection Bureau (CFPB), Discover, Federal Deposit Insurance Corporation (FDIC), Mastercard, PayPerks, and Visa.
