Paycard

Three Ways Paycards Help Employers Support Financial Inclusion

November 3, 2019

3 coworkers looking at a tablet

 

More than eight million households across the U.S. are unbanked1, many of whom operate in a cash-only financial system. This unbanked population carries the burden of navigating alternative financial solutions to pay bills, make purchases, budget and save money. Being unbanked or financially underserved comes at a price for the more than three-quarters of workers living paycheck to paycheck who often bear the cost of hefty fees to access and manage their money.2 When it comes to payday, many U.S. workers would benefit from quicker access to their money and being able to potentially avoid the extra step—and extra fees—in cashing a paper check.

Employers that activate pay solutions, like paperless payroll and direct deposit solutions for the unbanked, to support financial inclusion in the workplace can reap a plethora of benefits. More than 82 percent of financial executives believe that employee benefit packages focusing on financial wellness are key drivers of success for their companies.3 And, employers who help their employees with their financial wellness see higher employee satisfaction and increased retention.3 One example where employers can support financial inclusion among their workers, includes adopting Paycard programs, or prepaid payroll cards, which can help meet employees’ financial needs and streamline payroll operations.

Here are three reasons why employers should adopt Paycards to help support financial inclusion in the workplace:

  1. Mitigate Unnecessary Fees, Improve Productivity and Increase Pay Frequency with Paycards

Cashing checks can be expensive and inconvenient. Paper checks can impact their bottom line with high check cashing fees. Furthermore, unbanked employees have the added inconvenience of visiting a physical store to cash their check instead of receiving it electronically. Workers who sacrifice their hard-earned wages to incur unnecessary fees get less money in their pockets to pay for everyday expenses, which may result in many feeling financially stressed.

Employers can help their employees overcome many of these afflictions and move toward a more financially inclusive workplace. By offering Paycards, employers can help keep more money in their employees’ pocket by avoiding hefty check cashing fees and giving them access to more of their wages on payday. Additionally, Paycards can allow employers the option to pay their employees every day, which can increase employee productivity by 30 percent and decrease turnover by 41 percent. Employers who support financial inclusion by offering Paycards give their employees access to financial products and services that can help meet their needs.

  1. Paycards are a Win-Win for Employers and Employees

Digital and mobile payments are becoming more universal as people prefer convenience to make purchases. e-Commerce companies are making it easier than ever for consumers to transact. The same applies for mobile payments in the U.S., where 55 million people made mobile payments in 2018 alone.4 With digital and mobile payments on the rise,5 employers can support financial inclusion by offering Paycards to their unbanked employees who want to make online purchases. Paycard holders can use their card just like a debit card and quickly set up their account online to pay bills, make purchases and manage their everyday finances. Employers can help satisfy their workers’ financial needs by giving them access to e-commerce and mobile payments. Businesses who adopt Paycard programs can see a plethora of benefits of transitioning to paperless payroll solutions from making timely and compliant payments, serving a dispersed workforce, responding to workplace and employee changes, and meeting the needs of unbanked and underserved employees. Paycard programs are a win-win for employers and employees.

  1. Electronic Payroll Distribution Improves Payroll For Everyone

When employers do not offer a direct deposit option that their unbanked employees can access, it can present obstacles for employers and employees. Unbanked employees who don’t have access to electronic payroll distribution may experience the inconveniences of receiving paper checks, a higher risk of misplacing checks and longer wait times to receive their wages, resulting in a workforce that could be susceptible to poor financial inclusion. By offering electronic payroll distribution, employers can cut fewer checks and control costs by saving between $2.87 and $3.15 per paper check by using direct deposit.6 Electronic payroll distribution not only supports financial inclusion, but can also offer employees more tools to manage their money and allow employers to streamline payroll operations.

The use of Paycards is expected to grow to $60 billion, and 8.4 million Paycards are projected to be active by 2022.7 With the rise in use, employers should realize that Paycards are an instrumental financial tool to improve financial inclusion in the workplace. Paycards can allow employees to avoid check cashing fees, access the digital and mobile ecosystem, and receive their wages through electronic payroll distribution. Businesses that invest in employees overall financial wellness–through solutions like Paycards–can see improvements to employee productivity and turnover, streamline payroll operations, and drive more success across their company. Achieving financial inclusion in the workplace is a win-win solution for employers and employees.


 

1 Federal Deposit Insurance Corporation, October 2018, “2017 FDIC National Survey of Unbanked and Underbanked Households” https://www.fdic.gov/householdsurvey/

2 Career Builder, August 24, 2017, “Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey” http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to-Paycheck-is-a-Way-of-Life-for-Majority-of-U-S-Workers-According-to-New-CareerBuilder-Survey

3 Plan Adviser, April 26, 2017, “Financial Wellness Benefits of Key to Employee Retention” https://www.planadviser.com/financial-wellness-benefits-key-to-employee-retention/

4 eMarketer, November 9, 2018, “The Mobile Payments Series: US” https://www.emarketer.com/content/the-mobile-payments-series-the-us

5 Reuters, December 6, 2018, “The Next Decade in Digital Payments” https://www.reuters.com/sponsored/article/next-decade-digital-payments

6 NACHA, June 24, 2019, “Direct Deposit for Businesses” https://electronicpayments.nacha.org/direct-deposit/businesses/direct-deposit-businesses

7 Aite Group, September 7, 2017, “U.S. Payroll Card Market Overview: The State of Pay” https://www.aitegroup.com/report/us-payroll-card-market-overview-state-pay