Incent, Educate or Mandate

Adoption of payroll card programs has been the result of intense marketing efforts by both bank and corporate customer. Visa USA says employers that engage in promotional programs supplied by their banks have experienced as much as 35% acceptance by eligible employees in the first year.

The surest way to drive adoption is to mandate that all employees agree to either direct deposit or payroll cards. The laws regarding the legality of such mandates vary by state, according to Nizam Antoo, senior product director of prepaid products for Visa. However, even where mandates are allowed, employers are reluctant to do so. Instead, most prefer to educate employees on the benefits and even provide incentives.

ABSORBING ALL FEES?

Nora Arpin, first vice president of commercial card products for Comerica Inc., says many corporations find broad acceptance of payroll cards if they absorb all or most of the fees associated with issuing the cards. She notes that the savings of not issuing checks is so substantial that corporations can cover some of the monthly fees charged by the banks and still save money.

But she adds, “Some corporations have taken the position that they want the cost to them to be zero and they’ve pushed those fees down to the employees. When that happens, fewer employees sign up.”

Even when incentives cannot be employed, education and promotion can be effective. Both Visa and MasterCard provide materials that Arpin considers helpful.

The Visa package provided to member banks, for example, includes an educational CD, break room posters, and videos explaining the service and brochures. All of the materials are available in both English and Spanish, Antoo adds. MasterCard based its marketing materials, including sign-up posters, training brochures, pay stub inserts and a video to be played in break rooms on a survey of the 22,000 member American Payroll Association.

PROMOTING ADDED BENEFITS

Antoo encourages a full explanation of the benefits of the card. While many promotions center on the cost of the card program vs. paying to cash checks, there are other benefits that can be emphasized, including:

• The security of not having to carry around a lot of cash. Lost or stolen cards can be replaced but lost cash cannot.
• The convenience of not having to go to work to pick up the paycheck. Because the targeted audience is often part-time workers or those with multiple jobs, picking up a paycheck can be a burden. Additionally, fast-food or other employees that work nights usually have to come into the workplace during the day to pick up their checks.
• The ability to make card purchases. Antoo notes that employees like being able to use cards to make Internet, telephone order or other purchases. Many of these sales channels do not accept cash, but treat payroll cards just like a traditional debit or credit card. Additionally, employees can use the cards to pay bills over the phone or even pay parking tickets over the phone rather than show up and have to stand in line to pay cash.

Prepaid card marketing starts with selling corporations on the benefits. Some banks have integrated the offering as part of a prepaid debit card package offered to corporations. Comerica, for example, offers the payroll card as part of a package that includes incentive cards, travel and entertainment cards and relocation cards. Incentive cards are offered to employees in lieu of cash or other rewards when employees, particularly sales employees, accomplish certain goals.

Lauri Giesen