As Prepaid Financial Services products become available at an ever widening range of merchant locations, and come under increased scrutiny, the Electronic Payroll Coalition has tried to get ahead of the issues generated by this scrutiny by announcing its:
“’Joint Core Principles for Payroll Cards,’ developed in collaboration with the Consumers Union and the National Consumer Law Center. These core principles are an important component in the fair and safe use of the payroll card as a convenient method for employees to receive wage payments.”
Representing the Association for Financial Professionals (AFP); the American Payroll Association (APA); and NACHA — The Electronic Payments Association, the EPC promotes best practices and raises awareness of the benefits of electronic payroll, both Direct Deposit and payroll cards. Collaboration between the EPC and the Consumers Union and National Consumer Law Center resulted in many shared philosophies on the use of payroll cards.
While some of the core tenants promulgated by these organizations are already law (funds to be FDIC insured) or already identified by the NBPCA Best Practices document, there are indications that some participants expect to deliver additional recommendations that were not agreed to by all participants:
“ Collaboration between the EPC and the Consumers Union and National Consumer Law Center resulted in many shared philosophies on the use of payroll cards. The Core Principles unveiled today represent organizational consensus with respect to recommendations for all those who are engaged in issuing, selecting, using, or regulating payroll cards. Each organization may issue supplemental principles.”
In relation to other recent news (see Economic Study Finds Reloadable Prepaid Cards a Comparative Value in Environment of Rising Bank Fees ) which demonstrates that Prepaid Financial Services from the top prepaid suppliers cost less than bank accounts from the top banks, the last recommendation may be less employee friendly then perhaps this coalition expected:
“10. Employers who offer payroll cards must also offer direct deposit to a checking or savings account established by the employee at a bank or credit union of the employee’s choosing. Direct deposit provides a safe, reliable and convenient method of wage payment for employees with bank accounts.”
However, clearly every employer with any significant payroll should offer Direct Deposit, as except in high-turnover situations Direct Deposit is almost always the lowest cost mechanism for the employer to implement.