letting peos extend direct deposit payroll to all employees
DESCRIPTION
How can Professional Employer Organizations help their clients deploy direct deposit of payroll to 100% of employees, even those unbanked or underbankedTRANSCRIPT
How PEOs Can Extend Direct Deposit to All Clients’ EmployeesWithout requiring employer clients to issue payroll cards
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$40B/yearCashing of Payroll Checks
The Curse of Under-Banked Employees
>100M workersin 2M firms with 5-1000 employees$4.9T annual payroll
>50% payroll based on paper checksLeaves un(der)banked employeeswith no easy access to their wages
Sources: Small Business Administration US Census BureauFinancial Service Centers of America (FiSCA)
14M1 American workers go to the check casher after work to obtain cash from payroll check and PAY FEES
1 Sources: American Payroll AssociationStatista
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Where are the Payroll Cards?
Less than <25%* penetration among US EmployersAlmost no penetration of SMBs with < 1000 employees
Change to payroll system to issue cards
Verify vendor compliance with payroll card regulations
Direct deposit mandate not possible in all states
Not an alternative to checking accounts for EmployeesCannot receive wages for more than 1 job
Lose the card when lose the job
Usually not connected to cash load networks (Green Dot, Moneygram, Western Union, ReadyLink…)
Bare bones service: no mobile app, no rewards program…
* Source: Visa
PAYROLL
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How General Purpose Prepaid Cards Will Help Most useful to Employees
• Use the card for multiple jobs; keep the same card when switching job
• Load own cash on the same card
• Deposit paper checks directly into the card with MobileCheck Load (if employer only pays by check)
Easiest to deploy for small Employers• No need to change anything to existing payroll systems
(including paper check based)
• No involvement in managing issuance and termination of cards
• No regulatory compliance risk Same consumer protection as Payroll Cards
• New generation of GPR cards with FDIC insurance + “Reg. E Lite” protection + no monthly fee for direct depositors
Source: Small Business Administration
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Free Tool for PEOs
PEO-brandable web portal offering employees a choice of GPR Prepaid Cards to be used as a substitute for Payroll Cards.
Employee self-enrolls into card of her/his choice ACH routing & account number (same as for checking) immediately
issued to employee. Passed on to employer for organizing direct deposit.
Card sent to employee’s address by USPS No change needed to payroll system. No liability on PEO or employer.
No cost to PEO. No cost to employer.
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Portal Design
Responsive Web Design for PC, mobile and tablet access
Clean, flat UI English & Spanish Tracking of inbound links Re-branding by PEO
Detailed reporting of access by employees (e.g. chosen cards) and by employers (e.g. printing of fliers)
http://www.DirectDeposit.Center
http://www.DirectDeposit.Center
http://www.DirectDeposit.Center
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Participating GPR Cards
Requirements: Monthly fee ≤ $5 Free online sign up Mobile check load available Combination of:• CFSI’s Compass Principles• Visa’s “designation1” for prepaid• FDIC’s Safe Account template• CFPB’s Prepaid Card rules2
http://www.DirectDeposit.Center
1- As published June 2, 20142- to be finalized A1 2015
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Employers Section of Portal
Learn about the benefits for themselves and for their employees
Share with other employers via social networking sites (mostly LinkedIn)
Download a ready-to-print generic flier for employees
URL or html code for inclusion on their website to invite employees to sign up
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Employees Section of Portal
Learn about benefits to get a card
Share with other employees via email and Facebook
Summary of features & fees for each participating prepaid card, with a link to each card’s sign-up page
Link to mobile app for card sign up (for those cards having an app capable of mobile account opening
GPR Card sign-up page iFramed inside site (function of user choice above)
Link to download app for Mobile Remote Deposit Capture of paper checks (if not part of card app)
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Employees EmployersFree sign up Free access to portal
Card Providers No check issuance fees
New Card Revenues
New cardholders with high rate of Direct Deposits
Marketing costsPer activated card fee Portal
Issuers and Processors
Existing Costs Bank
Share of per activation card fee
PEO
Business Model
Processor
http://www.DirectDeposit.Center
OnlineSign Up
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Benefits
Immediate positive impact on under-banked employees
No Technical integrationChange to payrollNew untested productLiability to PEOs and their clients
New source of revenues for PEOs
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Banking Up55 Broad Street, Floor 7New York, NY 10004
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