Ten Considerations in Selecting a PayCard Vendor

There are a myriad of payroll card offerings in the marketplace – from banks, payroll companies and specialty providers.  While the various payroll card offerings are similar in many respects, there are important differences affecting both the employer and employee.  Here are ten key considerations in selecting a payroll card vendor:

1. How financially solid is the issuing bank? All payroll cards must be “issued” by a bank that is a member of the association whose brand appears on the card (generally, VISA or MasterCard).  Ideally, the issuing bank will be a large player in the prepaid debit card arena or a major financial institution.  While a smaller bank may be committed to the payroll card business and may be financially sound, there is less risk of program disruption when selecting a prominent issuing bank (such as META or Palm Desert).

2. Are all cardholder funds and corporate reserve funds on deposit at the sponsor bank FDIC insured?  Are all funds held in fiduciary accounts?  If the answer to either of these questions is no, the vendor should be disqualified.

3. What are the upfront set-up costs for the payroll card program?  Can the program and collateral materials be branded with the employer’s logo? Generally, set-up costs are limited to a small account set-up fee per account, covering the cost of account establishment, card embossing, postage and program/reporting set-up in the vendor’s system.  The payback to employers for a payroll card program is generally less than a month.  As a result, small differences in upfront card establishment fees should not be a major factor in the selection process.

4. What is the implementation process? The vendor should have a clearly defined process for launching the payroll card program.  The lack of a clearly articulated process can result in a un-met expectations and delays in program launch.

5. How will the payroll card program be integrated into the new hire and payroll processes?  The vendor should support both a web-based employer set-up as well as a fully integrated offering.  Key processes such as creating cards, updating “instant issue” cards, loading cards and card account management/reporting should be easily accomplished using tools supplied by the vendor.

6. How are card accounts funded?  Is there “instant funding” capability?  Card accounts should be able to be funded using ACH (Direct Deposit).  The ability to fund cards instantly through a client portal is a key benefit, supporting off cycle payments, expense reimbursements and payroll corrections.  If instant funding is available, the process for funding the instant loads should be clearly defined and automated.

7. How can funds be withdrawn by the employee? Payroll card programs range from very limited cards that can only be used to withdraw funds from an ATM to full account solutions that offer all the benefits of a traditional checking account.  At a minimum, the card should be branded (VISA or MasterCard, typically) – supporting signature and PIN debit withdrawals.  ATM withdrawals should be supported, through a large network of “surcharge free” ATMs (generally, MoneyPass or AllPoint).  The program should support ACH debits and bank cash advances as well.  Preference should be given to offerings with banking features such as personalized checks, online billpay and rewards programs.

8. What customer service options are available for employees? At a minimum, a payroll card program should include online banking (internet), IVR banking (phone) and live customer service agent assistance – at no cost to the employee.  Real-time SMS text message alerts are a key advantage.  Avoid any charges for these services as they materially increase the cost of the account to the employee.

9. Are all program offerings bi-lingual? Given the diversity of the American workforce, a payroll card program should be bi-lingual (English and Spanish) in all areas of cardholder interaction.  This includes applications, terms of service, online banking, IVR/phone interactions, live customer service assistance and program marketing materials.  If other languages are prevalent in the workforce, the vendor’s willingness to support those languages may also be a consideration.

10. What fees are charged to employees? A payroll card will generally cost an employee less than using a check casher.  However, payroll card fees can add up.  Ask the vendor what the average fees are per card account across all payroll card programs with the fee schedule being offered.  The cost should be in the $10-$15 range monthly for a full bank account alternative product and substantially lower for a limited PIN debit product.

Once implemented, a payroll card program can free up valuable payroll resources while reducing operating expenses and providing a tangible employee benefit.  Selecting the right payroll card partner is a critical first step.

---

Comments RSS You can leave a response, or trackback from your own site.