The Next Generation of Paycards and What You Need to Know

In January of this year, the Center for Financial Services Innovation released its Compass Guide to Payroll Cards which defines industry-wide best practices for the design and delivery of high-quality payroll cards and promotes choice, safety, affordability, transparency and convenience. In this post, we’ll outline the three levels that compose the structure of the guide; core practices, stretch practices and next generation practices.

Level 1: Core Practices

Choice

“There is no one-size-fits-all approach to a high-quality payroll card and there is inherent value to choice, diversity and innovation in the marketplace.”

1. Employees are offered a choice about how they would like to receive their
   wages.
2. Employees are provided clear information that enables them to make an informed decision about how they would like to receive their wages prior to enrollment.

Safety

1. Cardholders’ funds are insured with FDIC or NCUSIF pass-through insurance.
2. In the case of a lost or stolen card or unauthorized charges, errors, or disputes, the cardholder’s card account is protected by the Networks’¹ Zero Liability Policies^{2, 3} and the cardholder has effective
   procedures to resolve disputes.

Affordability

1. Cardholders are able to access their full net wages each pay period without
   cost.

Access

1. Cardholders can make purchases from, and payments to, a variety of
   merchants and billers.
2. Wages that are loaded onto the card are available for immediate use on payday.
3. Cardholders can make withdrawals at locations that are accessible and convenient.

Transparency

1. Before enrolling in a payroll card program, employees receive
   communications that allow them to understand the card’s fees and account terms.
2. Upon enrolling in a payroll card program, cardholders are provided with a clear and understandable Cardholder Agreement.

Information and Support

1. Cardholders are presented with multiple ways to conveniently access their
   account balance and transaction histories.
2. Cardholders can easily obtain customer service assistance.

Personalization

1. If an employer offers instant issue cards, a personalized card is also available to cardholders, either as an option or issued automatically.

Level 2: Stretch Practices

Convenience

1. Cardholders can send money to other cardholders from their card.
2. Cardholders can register for secondary cards to provide to family or friends.
3. Cardholders are offered the option to split their wages between a payroll
   card and another form of electronic disbursement.
4. Sub-accounts allow cardholders to set aside funds for budgeting or saving purposes.

Mobile

1. A mobile application⁴ or mobile-enabled website⁴ allows cardholders to perform basic transactions and access important account information on the go.

Education

1. Advice and support is provided to cardholders to ensure they derive the most value from their cards.

Portability

1. Cardholders can choose to receive multiple sources of funds on their cards.

Level 3: Next Generation Practices

Budgeting

1. Personal financial management (PFM) tools enable cardholders to plan, budget, and track their expenditures.

Savings

1. Cardholders have the option to store and accumulate funds in a savings account.

 

Each of the three levels has its own unique set of guidelines, and offers another level of quality to a potential user. These guidelines can be used by paycard companies as a general explanation of best practices, and employers can use them as a comparison tool when researching potential paycard services for their employees.

On April 30, 2015 rapid! PayCard will be hosting an APA members-only webinar to take a closer look at the Guide. Topics of discussion will include:

• How regulatory changes impacting the payroll card industry were
  brought on by recent events.
• The employer perspectives on payroll cards as part of an overall employee benefits package.
• How will the Compass Guide to Payroll Cards be used by the Consumer Financial Protection Board.

If you are interested in attending this webinar please register via the APA website.

¹MasterCard or Visa

²MasterCard Zero Liability: Conditions and exceptions apply. Please see website for more information about MasterCard Zero Liability: mastercard.com/general/zero_liability.html

³Visa Zero Liability: Visa’s Zero Liability Policy covers U.S.- issued cards and does not apply to certain commercial card transactions, or any transactions not processed by Visa. You must notify your financial institution immediately of any unauthorized use.  For specific restrictions, limitations and other details, please consult your issuer.

⁴While rapid! PayCard does not charge for this feature and service, standard text messaging, data and cellular rates may apply. Please check with your cell phone carrier and inquire about fees your carrier may associate with these services.

The information contained in this article and any other article do not reflect the views of rapid! PayCard®.