1  Utah Chapter of the American Payroll Association

By:

The Benefits of PayCards in the Payroll Department

100% DIRECT DEPOSIT:

Utah Chapter of the American Payroll Association

2  Utah Chapter of the American Payroll Association

•  Regulatory  changes  2009  &  2010  •  Environmental  Impact  of  Electronic  Payroll  

•  Underserved  Segment  

•  Paycards  •  Reasons  Why  PayCards  Don’t  Achieve  Company  Goals  

Agenda

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REGULATION

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The   newly   established   Consumer   Financial   ProtecMon   Bureau   has   a   wide-­‐ranging   mandate   and   broad   powers   for  invesMgaMng  and  regulaMng  things  like  checking  accounts,  credit  cards,  and  educaMon  and  home  loans.  

There  always  is  the  risk  that  it  will  be  ineffectual—or  go  too  far  and  over-­‐regulate.  To  win  over  skepMcs,  it  will  need  to  get  off  to  a  fast  start  and  show  that  it  can  avoid  geUng  tangled  up  in  its  own  red  tape.    

•   Extend   protec-ons   to   all   prepaid   cards.   Credit   and   debit   cards   come  with   built-­‐in   protecMons   against   fraudulent  charges,   but  many  prepaid   cards  don't—a  growing   concern  because   they   are   increasingly   being  used   for   a   range  of  purposes,  including  health  savings  accounts,  rebates,  unemployment  insurance  and  workers'  compensaMon.  

Payroll   cards  already  have   the   same  protecMon  as  debit   cards:   a  $50   limit  on   liability   if   the   loss  or   theZ   is   reported  within  two  days  of  discovery  and  up  to  $500  if  it  is  reported  within  60  days.  Visa  and  MasterCard  promise  zero  liability  on  their  prepaid  cards,  but  the  NaMonal  Consumer  Law  Center  would  like  all  prepaid  cards  to  be  covered.  

Nessa  Feddis,  senior  counsel  at  the  American  Bankers  AssociaMon,  quesMons  whether  that  is  necessary.  There  are  few  complaints   about   prepaid   cards,   she   says,   and   someone   would   have   to   determine   how   mass-­‐transit   cards   and  Starbucks  cards  would  be  treated.  "With  regulaMons,  there  are  unintended  consequences,"  she  says.  "There  are  always  costs.”  

Write  to  Karen  Blumenthal  at  karen.blumenthal@wsj.com    

There is a new regulator in town. Will it make a real difference? Dodd-Frank Wall Street Reform and Consumer Protection Act

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There is a new regulator in town. Will it make a real difference? Dodd-Frank Wall Street Reform and Consumer Protection Act

Debit  Card  Regula-ons  

•   The  FRB  will  be  required  to  establish  parameters  for  the  seUng  of  PIN  debit  and  signature  debit  card  interchange  based    on  a   standard   that   is  “reasonable  and  proporMonal   to   the   cost   incurred  by   the   issuer”   (although   concessions  will   be    made  for  fraud  prevenMon  and  fraud  costs).  

•    Card   issuers   with   less   than   $10   billion   in   assets   will   be   exempt   from   these   restricMons,   as   well   as         government   electronic   benefit   cards   and   general   purpose   reloadable   prepaid   cards,   under   certain  

condiMons.  

•   Network  fees  may  be  subject  to  the  FRB’s  regulatory  oversight  if  it  deems  that  certain  fees  are  being  used  to  circumvent    interchange  price  controls  or  otherwise  compensate  issuers.  

•   The  Act  allows  merchants  to  establish  transacMon  minimums  of  $10  or  less  or  the  use  of  a  credit  card,  while  government    and  insMtuMons  of  higher  educaMon  will  be  able  to  establish  maximum  credit  card  transacMon  amounts.  

•   Merchants  will  also  be  able   to  provide  discounts   to  serve  as  an   incenMve  for  consumers  to  pay  with  various  payment    methods  such  as  cash,  checks  or  prepaid  cards.  

•     OverdraZ  must  be  OPT  IN  

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OTS Clamps Down on MetaBankʼs iAdvance Activities

Since  Oct.  6,  MetaBank  has  operated  under  a  direcMve  issued  by  the  Office  of  ThriZ  Supervision  (OTS)  requiring  the  bank  to  disconMnue  selling  its  iAdvance  small  dollar  line  of  credit  to  third  parMes  as  of  Oct.  13,  2010,  and  limiMng  its  ability  to  book  new  prepaid  business  without  OTS  approval.  

The  OTS  direcMve  is  based  on  an  examinaMon  of  the  bank,  which   alleges   that   MetaBank   engaged   in   unfair   or  decepMve  acts  or  pracMces  (UDAP)  in  violaMon  of  SecMon  5   of   the   FTC   Act   and   OTS   AdverMsing   RegulaMon   in  connecMon  with  its  operaMon  of  the  iAdvance  program.  

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The days of free checking have ended. You may experience employees dropping direct deposit.

8  Utah Chapter of the American Payroll Association

What method do you use to deliver paychecks to your employees who are not in the same location where the payroll is processed?

2010 American Payroll Association Trendline Survey

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Number of Employees

2010 American Payroll Association Trendline Survey

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States

2010 American Payroll Association Trendline Survey

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12  Utah Chapter of the American Payroll Association

Corporate Sustainability

 

Taking  the  paper  out  of  payroll  will  contribute  to  corporate  iniMaMves  

     

Exercise  Corporate  Responsibility    with  100%  Direct  Deposit.    

Most  major  employers  have  corporate  sustainability  ini-a-ves  to:    

•   Reduce  Energy  ConsumpMon  •   Reduce  Waste  •   Reduce  Paper  ProducMon  •   Improve  Environment  •   Sustain  Natural  Resources    

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When do you plan to evaluate or implement paperless payroll?

2010 American Payroll Association Trendline Survey

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How many employees do you pay by paper check every pay period?

2010 American Payroll Association Trendline Survey

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1 Employee = Huge Savings

By  switching  to  Direct  Deposit,  an  individual  employee,  paid  every  two  weeks,  can:    

•  Save  a  pound  of  paper  per  year    •  Avoid  the  release  of  4  gallons  of  wastewater  into  the  environment    

•  Avoid  the  release  of  1  pound  of  greenhouse  gases  into  the  atmosphere.  This  amount  of  greenhouse  gases  is  the  equivalent  of:    

–  4  miles  not  driven  in  your  car    

–  ½  square  foot  of  forest  preserved    

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Consumer Electronics and Services that are a Necessity, by Age, May 2010

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What critical factors have prevented your company from implementing a paperless payroll system in the past?

2010 American Payroll Association Trendline Survey

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Underserved Segment

•   There  are  106  million              underbanked  people  in          the  United  States  

•   40  million  under  banked          households  

   

106  million  underbanked  in  the  U.S.    

50  million  people  lack  a  credit  score      

19  Utah Chapter of the American Payroll Association

In your professional opinion, why do you believe your company’s employees may have stopped using traditional banking services?

2010 American Payroll Association Trendline Survey

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21  Utah Chapter of the American Payroll Association

Cardholders  can  use  everywhere  debit  cards  are  accepted  including  

   Purchases       Bank  branches  for  cash     ATM  

 Cardholders  are  not  required    to  be  “Banked”  customers  

A  payroll  card  is  a  pre-­‐paid  debt  card  which  employers  can  have  their  payroll  directly  deposited  onto.  It  is  not  a  credit  card;  it  is  a  pre-­‐paid  debit  card  and  requires  no  credit  check  or  checking  account.  

PayCard Definition

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What concerns you the most about implementing a paperless payroll system?

2010 American Payroll Association Trendline Survey

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For the state(s) where your company pays employees, what are the laws governing electronic wage payment (i.e., direct deposit and paycards)?

2010 American Payroll Association Trendline Survey

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Visa PayChoice* Strategy Map

01/26/11

•  PayChoice  enables  employer  to  mandate  electronic  disbursement  of  wages  through  direct  deposit  and  payroll  cards.  •  This  map  is  provided  for  informaMonal  purposes  only  and  should  not  be  considered  legal  advice.  

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Hurdles to Successful Payroll Card Adoption and Enrollment

Payroll  Card  

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Inadequate Employee Training

A  PayCard  company  without  a  STRONG  client    educaMon  and  training  system  is  WEAK.  

PayCard  Providers  must  offer…      

   PayCard  EducaMon     Training  on  Use     An  Employee  SaMsfacMon  guide  

PayCard  programs  with  inadequate  client  training  will  have  LOW  sa-sfac-on  and  program  success  will  be  MINIMAL.    

Client  training  is  Cri$cal!  

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If you had the ability to utilize an Instant Fund Load, what would you use it for?

2010 American Payroll Association Trendline Survey

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Thank You If you have any questions please contact

rapid! PayCard

Brian Slowik Tampa FL 727.828.1635 bslowik@rapidpaycard.com