US payroll cards not lively enough for customers’ lives
The US payroll card industry received high marks for its standards and its ability to “stretch beyond the basics” but got an average mark for its ability to provide additional services that “improve customers’ lives,” reports Paybefore (Banking Technology‘s sister publication).
According to the first-ever “Payroll Industry Scorecard” from the Center for Financial Services Innovation (CFSI), it analysed eight payroll cards programmes that account for approximately 75% of the US payroll card industry to arrive at its findings.
Those payroll card programme managers are ADP, Comdata, First Data, Global Cash Card, Netspend, Transcard, UniRush and US Bank. At last count, about 8.7 million workers received wages via payroll cards, CFSI says. That compares with some 5.5 million workers who received wages via paper cheques.
The purpose of the scorecard was to “contribute to the dialogue about payroll cards,” according to the nonprofit organisation. Thea Garon, a CFSI manager who wrote the report with Kate Flocken, recently wrote an opinion piece for Paybefore to debunk some common myths about payroll cards, which continue to face scrutiny from regulators.
“What we found was encouraging: The payroll cards in our sample offer many of the basic features and functionality to be considered high-quality products. But opportunities remain for programme managers to stretch beyond the basics by offering additional features that can help cardholders build long-term and lasting financial health,” she wrote.
A snapshot of the grades shows some of the strengths and areas for improvement for the country’s major payroll card programmes.
Core features, A-
These are defined as “standards for a high-quality payroll account”. Such areas as security, access and personalisation were among the highest-scoring features in this category, with affordability and transparency lagging behind. For transparency, “few programme managers offer additional tools, such as online videos and tutorials, that can help cardholders derive the most value from their cards,” the report says.
Stretch features, B+
These are defined as “best practices for providers to stretch beyond the basics”. The areas with the highest marks include mobile features and portability, with convenience and education earning lower grades. When it comes to education, for example, “few programmes train customer service agents to routinely use calls as an opportunity to review employees’ accounts, identify unnecessary fees, and explain how they can avoid those fees in the future”.
Next gen features, C-
These are defined as “additional services that improve consumers’ lives”. Both budgeting and savings stand out as categories that need work. “Only a handful of the programmes in our sample allow employees to link their payroll card to a separate savings platform. Such platforms allow employees to set aside money for future expenses and to be resilient in the face of unexpected events.”