What to Expect of the Paycard Market in the Next 24 Months
Global Cash Card
Agenda
◆ Prepaid Overview◆ Post PC Era◆ Security◆ Education◆ Service◆ Support of Positive Financial Habits◆ Compliance◆ Value Added Features◆ Prepaid Overview◆ Payroll Card Case Study
1990s
Today
Activation and load services, balance return hit the market
1994
2001
2002
2003
20052007
Adoption andexpansion increasing
2009 FDIC Study
2010 Prepaid
regulation Dodd-Frank Wall StreetReform Act
2011
2012
$4T opportunity
Prepaid timeline
~$14.7B loaded onto 45M network-branded cards
10% of all households use reloadable prepaid cards
U.S. State agenciesadopt prepaid
2B transactions/ 110M cards
are issued globally Over 100,000 retail locations
Prepaid, the beginning
How is prepaid used today
• General purpose • Gift • Travel • Parents of youth/teens • Cross border remittance
Consumers• Payroll • Incentive/rebate/loyalty • Commercial spend • Employee benefits • Health: FSA, HRA, HSA • Insurance claims • Worker’s compensation
Businesses• Child support • Unemployment • Social Security • Tax refunds • Disaster relief
Governments
By the numbers: Paper checks
1. M. Fellowes, M. Mabanta. “Banking on Wealth: America’s New Retail Banking Infrastructure and Its Wealth-Building Potential.” Brooking Institution. 2008. http://www.brookings.edu/~/media/research/files/reports/2008//1/banking%20fellowes/01_banking_fellowes.pdf
2. “2010 Report on Check Casher and Basic Banking Fees.” Massachusetts Division of Banks. 2010. http://www.mass.gov/ocabr/docs/checkcashreport2010.pdf
Americans without bankaccounts pay
$8B Each year
At check cashing outlets, payday lenders and bill pay centers1
Employees pay up to
3%To cash their payroll checks with a check cashier2
Someone earning
$26Ka year would spend approximately…
$750in check-cashing and money order fees to pay their bills2
The Visa payroll card solution
Visa payroll cards enable companies to offer employees without bank accounts the
benefits of electronic payroll direct deposit◆ It is not a credit card – everyone
qualifies, and there is no creditcheck required
◆ Employees receive a prepaid,reloadable Visa card in place of a paper payroll check
◆ Employers can also reimburse employee expenses, pay bonuses, awards, and termination pay directly to the card
◆ Employees can use the card to make purchases and pay bills anywhere Visa debit cards are accepted. Employees can access cash at any Visa/Plus® ATM worldwide1
Note: 1. Provided that issuer participates in the Visa/Plus network
Benefits of paycard implementation
Increased direct deposit
Reduction in costs
Improved business process
Provides a solution for unbanked
Increased compliance
Employee satisfaction
Helps employees manage financies
Reduction in fraud 2
7
10
10
12
24
29
37
Industry outreach
Resources
Available on Visa Online
◆ Payroll toolkit: Visa and Network Branded Prepaid Card Association (NBPCA) cobranded materials to help educate Employers and employees about the benefits of electronic pay.The toolkit includes the following:• Employee tip sheet: Overview of benefits, how to access wages and how to avoid fees,
whenever possible• Infographic: Illustration highlighting the cost savings of payroll cards over checks• Employer guide: Information on choosing and rolling out a payroll card program (available soon)
Available upon request:
◆ The Method of Wage Payment Guide: This guide provides an analysis of the current wage and hour laws within the 52 U.S. jurisdictions (50 U.S. states, Federal, and D.C.) and the requirements for each payment method
◆ Green and Yellow State Authorities Guide: An overview of the states that allow an employer to achieve 100% electronic disbursement of wages by offering direct deposit and payroll cards (e.g., no checks) and the legal basis for this "green" or "yellow" categorization
◆ APA Visa Payroll Card Portal is a great resource from Visa and the American Payroll Association for specific state laws on electronic pay and for the latest information on compliance and regulations (link)
Staggering Mobile Adoption
◆ Mobile devices exceeded world's population in 2012.
◆ Fastest growing demographic• 18-24 year olds
◆ Tipping Points• Mobile traffic to exceed fixed by 2016
Smartphone
◆ What is a smartphone?
Smartphone: Game Changer
◆ Nearly half (46%) of U.S. adults use a Smartphone
◆ Usage tripled in 2011◆ Largest growth demographics• 18-24• Low Income
◆ Marks Post-PC Era
Top Mobile Os: North America
AppleAndroidOther
The Experience
◆ Rising Standard◆ Consumers driving the experience◆ Industry Catch-Up• “In the next 24 to 48 months, we see a
revolution occurring. The consumer is actually ahead of [the industry] and we feel it’s time to catch up.”
– Don Kingsborough, PayPal, Prepaid Expo USA in Las Vegas
Cards and Wallets
◆ Virtual Wallet• Passwords• $ Payment• Loyalty• Preferences and personal information
◆ NFC/RFID Technology◆ GPS/Locations Services◆ Mobile is a key piece of delivery strategies
including:• Embedded Prepayment• Loyalty options
GCC Mobile AdoptionTotal Cardholder Site Traffic
to Mobile TrafficOther 9500
Android 60878Apple Mobile
42000
All Traffic 658530
All TrafficApple MobileAndroidOther
Our Experience
◆ Mobile Cardholder• Check Balance• Initiate Transfers• Alerts• Text on Demand
Our Experience
◆ Administrators• Manage Employees• Load Pay
Security Considerations
Cardholder
PartnerEmployer
Shared Responsibility
Security Behavioral Analysis
◆ Intentionally “lost” smartphones in 50 cities
◆ 57% attempted to access “Saved Passwords” file
◆ 43% attempted to access banking app◆ 50% attempted to contact owner
- Symantec Study, 2012
Global Cash Card Security
◆ PCI Certified◆ Business Intelligence◆ Fraud Protection◆ Visa Zero Liability Policy ◆ FDIC insured balances◆ SSAE-16 Audited◆ Multi-Factor Authentication
Security Considerations
◆ Multi-Factor Authentication Now• What You Know• What You Have• How You Behave
◆ Future: Who You Are?
Security: Multi-Factor Authentication
◆ RSA Token & Mobile Device◆ Passwords, PINs, Personal information◆ Monitor & Due Diligence• Maintain Password strength• Change often• secure our devices with passcode• DON’T share
Future Security: Who You Are?
◆ Biometric Security◆ Fingerprint Readers• Integrated into Laptops
◆ Facial Scanning• Available on latest Android version• Available on jailbroken iPhones
Future Success
◆ Simple to Use◆ Trust in your partners and providers◆ Security◆ Acceptance
Access & Information
◆ Cardholders Require Real Time, On Demand Access to their Most Critical Information
• Information like balance, transaction history, and paystub content are most popular
• Access via live agent, IVR, text, phone, email, mobile to mobile, fax, & smart device delivery must be available
• As the mobile smart device/tablet market continues to evolve paycard providers must be proactive to engineer simple and easy integration processes
Education
◆ Paycard programs must have an excellent education program
• Education and variety of delivery methods ensures highest levels of paycard and direct deposit participation
• In the next 24 months only providers that have true dedicated field support and implementation teams will be able to proactively deliver the best results
Education
• The paycard provider must acclimate to the customer’s business culture and provide methods including but not limted to: onsite training, IVR, webinar, conference call, customer service orientation, DVD’s, and marketing materials customized to the customer’s specifications.
• Continuing education for the life of the program is mandatory.
Service
◆ Cardholders Want & Expect “World Class” Customer Service
• Must be free• Available 24x7x365• Contact Centers, regardless of industry, that
are outsourced especially abroad are not well received
• Measure the customer experience from start to end
Service
◆ The next 24 months present a great opportunity for providers to enhace their service to cardholders
• Develop their social media outlets• Broaden existing service by supporting
online chat & email response groups• You have to be available the way your
customers want you to be available
Support Positive Financial Habits
◆ Paycard providers that deliver free and minimal transactions have the highest retention and customer satisfaction
• This has to be fostered by strong education & implementation plans
• Paycard providers that outsource some or all of their key segments gamble on improper usage of the card to maximize revenue
• When cardholders feel “nickel and dimed” they are more likely to not utilize a paycard and make their frustrations known to their employer
Support Positive Financial Habits
• Supporting positive financial habits translates in delivering a paycard program that is truly an employee benefit
• Access to budgeting tools including but not limited to: savings calculators, online bill pay, and rewards are crucial
• Paycards are no longer for the unbanked and attract a variety of other target audiences. Feature rich programs with cost savings tools is the best model.
Where you can Mandate Paperless Pay
• Alabama• Arizona• Colorado• Delaware• Indiana• Kansas• Kentucky• Louisiana• Maine
• South Carolina • South Dakota • Tennessee • Texas • Washington • Wisconsin • Utah
*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards
• Massachusetts • Michigan • Mississippi • Missouri • Nebraska • North Dakota • North Carolina • Ohio • Oklahoma • Oregon ^
Where you can Mandate Paperless Pay
AK
HI
OH
WA
CAVA
MI
GA
KS
IA PA
WVDE
MS
ORSD
MO
WI
MN
KY
SC
FL
NC
UT
AZ
ND
NM OKTN
NE
WY
LA
IL IN
AR
VT
NY
CO
AL
MT
ID
NV
TX
MD
ME
NJ
DC
MARI
CT
NH
*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards
State Regulations in “Yellow” States
◆ Florida – Choice of paycard or direct deposit can be a condition of hire for employees hired after July 1, 2009. However, already employed individuals receiving checks cannot be terminated for refusing to be paid electronically.
◆ Iowa – Employees hired after July 1, 2005 may be given the option of being paid on a paycard or by direct deposit.
◆ Virginia – Employees hired after January 1, 2010 may be given the option of being paid on a payroll card or by direct deposit.
“Green” states permit Paperless Pay
“Yellow” states with restrictive Paperless Pay
“White” states require voluntary participation
AK
HI
OH
WA
CAVA
MI
GA
KS
IA PA
WVDE
MS
ORSD
MO
WI
MN
KY
SC
FL
NC
UT
AZ
ND
NM OKTN
NE
WY
LA
IL IN
AR
VT
NY
CO
AL
MT
ID
NV
TX
MD
ME
NJ
DC
MARI
CT
NH
*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards
What Your Employees Can Save With Global Cash Card
Payroll Cards are more cost-effective for consumers than other payment methods, including checking account, some prepaid GPR cards and cash-based options.
Payroll CardsGPR CardsCheck Cashing/Money OrderBasic Checking Account
*Results based on a study conducted in August 2011 by Bretton Woods, a management advisory firm specializing in financial institutions. Source: Paybefore.com.
38
Payroll Card Case Study
◆ What’s in it for the unbanked EE?
• Convenience factors• Company obligation to minimize payroll
distribution risks (uncontrollable acts)• Purchasing power via a branded card• Promote at least 5 ways of accessing
their pay without paying a dime
39
Payroll Card Case Study
• Average Age
• Average Tenure
• Male Percentage
• Female Percentage
• Full-Time Percentage
• On-Call Percentage
• Part-Time Percentage
• Hourly Percentage
• Salary Percentage
• Ethnicity Percentages ➢White ➢Hispanic/Latino ➢African American ➢Asian ➢American Indian ➢2 or More Races
◆Unbanked EE Demographic Study
Paperless Payroll Performance Metrics
KEY PERFORMANCE INDICATORS
◆ Cost per Paycheck
◆ Cost per Off-Cycle Check
◆ Cost per Unclaimed Paycheck
◆ Cost of Overnight Delivery Expense
◆ Cost of Stop Payments
◆ Paperless Pay Distribution Rate
◆ Electronic Payroll Participation Rate
STRATEGIC EXECUTION FOCUS
Finance Customer People
Key Performance IndicatorsProcesses
Critical Success Factors
Corporate Objectives
Strategic Vision
Why Change Initiatives Fail by John Kotter, Leading Change
Change Not Grounded In Corporate Culture
Under Communicating The Vision
Lack Of A Vision
Not Removing Obstacles To The Vision
No Powerful Guiding Coalition
No Systematic Plans For Early Wins
Lack Of Urgency
Declaring Victory Too Soon
Readiness Drivers Definition Question it looks to answer
Self-Efficacy
Confidence in individual and group's ability to make change succeed
Can we do this? Will this work?
Principal Support Key organizational leaders support this particular change
Do organizational leaders believe in this change?
Need for Change A gap between the current state and ideal state
Why a change?
Appropriate of the Change
The correct reaction to fix the identified gap Why this change?
Personal ValenceClarifies the intrinsic and extrinsic benefits of the change
What's in it for me?
Understanding of the Change
Informs the individual of the specific change requirement. What is the change?
Modified table from (Bernerth, 2004, p. 41)
Readiness for Change Factors
43
Payroll Card Case Study
◆ Behavioral Change Initiatives
• Implement pay selection enrollment form• Consider charging EEs for stop payments• Where applicable, mail all paper paychecks• If checks can’t be mailed, consider changing
pick-up time for payroll check distribution• Consider one-time conversion incentive
44
Payroll Card Case Study
◆ Keys to Employee Adoption • Promote savings account component• Family Member cards• Competitive fee schedule • Allow multiple EFT accounts• Partner with ambassadors• Utilize instant issue and signature paycards • Make the process simple and easy (ESS)• Consider other incentives – just ask
45
Payroll Card Case Study
◆ Marketing efforts – next steps• Employee PAYcard signage• Employee communication plan x 3• Frequently Asked Questions doc• Provide locations of surcharge-free ATMs in
and around business vicinity • Consider random drawings for loaded
PAYcards ($50, $100, $500 increments)• Post-implementation metric reporting – Did
you get the expected results from the initial phase I rollout?
46
Payroll Card Case Study
◆ Proven Results
• Over 3,000 PAYcards • 96% Electronic Payroll Participation • PAYcards used for CA term wage payments• Eliminated state mandated waiting time
penalties• 95% Print Suppression Rate for ePayroll • Significant component to BCP strategy• Lean Practice for Elimination of Waste
Next Steps – Plan to Win
◆ Create a vision◆ Identify pain points◆ Communicate Strategy◆ Prepare for Change◆ Pilot Solution◆ Implement Rollout◆ Measure for Results◆ Sustain Momentum
If You Don’t Know where you’re going, any road will take you there…..
Questions
Contact◆ For more information please contact:
George Mavrantzas
Global Cash Card
Director of Special Projects
Phone: 888-220-4477 ext. 305
E-mail: [email protected]
Website:
www.globalcashcard.com
Global Cash Card