Many payroll debit cards can be overdrawn and those card programs charge “Over-limit or NSF fees” • The primary reason the unbanked are unbanked is largely due to past exposure to and their desire to avoid overdraft fees. Employers who implement with a paycard where an employee is subject to overdraft fees, is putting their employees back in the very same position the employee was avoiding? • Overdraft fees are dependent upon provider can be excess of $30.00/incident. • Do they allow a “fee waiver period”? • If yes, Why? Could it be to allow for the employee to not incur overdraft fees during the initial launch phase? • Respect and regard for the cardholder, your employee is VITAL to your Direct Deposit / Paycard Initiative and the Overdraft practice brings into question a paycard provider’s core focus. Always try to choose a provider that has an outstanding “Cardholder Experience” as the core focus in order to avoid employee’s resistance to your Direct Deposit Initiative.

A Top Tier Paycard Program respects and values your employees/cardholders and never charges overdraft fees as they create a negative cardholder experience.

The majority of paycard providers still do not offer an instant issue branded card to be issued/used immediately at the hiring manager’s location (i.e. VISA or MasterCard). • Unbranded cards can only be used for ATM transactions and are far more profitable to a paycard provider. • An unbranded instant issue card is simply an ATM card with associated higher cardholder fees and less “Pay to the Penny” access points. A paycard that offers only ATM access severely limits the usability to the cardholder, forcing cardholders to continue to live in a costly cash world (i.e. needing to purchase money orders to pay bills)

Does your paycard allow for overdrafts?

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Is your paycard instant issue branded from day one of program roll-out?

This is a compilation of review items that many of the American Payroll Association CPPs suggest asking all of your prospective paycard providers. The list is comprised of topics that may or may not be important to your specific company, organization or situation but are worth discussing in detail prior to selecting your preferred vendor.

• An ATM paycard even if only temporary, brings into question an employee’s ability to gain access to their “pay to the penny”. Access to “pay to the penny” is a requirement in many states for a paycard to be legally compliant to the “letter of the law”. ATMs only provide a “spirit of the law” access point as they rarely, if ever, provide “pay to the penny”. • When a secondary upgraded embossed VISA or MasterCard branded card is offered, that upgraded card often comes with a fee.

It’s important to ask the question and you should evaluate if the relationship is new to the paycard provider. If it is new, why? Is it due to a Bank Failure?

With the environment today, it is important to ask these questions. Companies should take caution with a bank that has been through FDIC acquisition and when the FDIC Acquiring Bank is new to the prepaid business. This represents future risk to your cardholders and additional work for your company. Prepaid issuing banks are specialized and require depth of knowledge for BSA and AML program underwriting. Without experience, interest or understanding the NEW bank may simply discontinue their participation in the paycard program altogether.

What can happen next and what does this mean to YOU? When an employer chooses to implement with a paycard provider that subsequently and without warning migrates to a different banking partner, that employer will be REQUIRED to re-issue all previously issued cards under the NEW BANK program. This will require the employers of those card holders to endure the costly, time consuming and cumbersome process of updating their payroll systems. In essence, employers will have to go through the rigors of implementing a new paycard program and employee/card holders will have to be re-trained to become acclimated to the “new” program.

You want to avoid a paycard provider whose partner bank offers “payday loans”.A payday loan (also called a paycheck advance) is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. These loans are considered by many to be predatory in practice and can often carry interest rates of up to 650% APR.

The question an employer considering paycard implementation should ask is a philosophical one. If a paycard provider’s partner bank has in the past or currently is offering a “payday loan” product, are they truly looking out for the best interest of my employees/cardholders? Or, are they simply preying upon a particularly vulnerable demographic.

Since Oct. 6, MetaBank has operated under a direcMve issued by the Office of Thrift Supervision (OTS) requiring the bank to discontinue selling its iAdvance small dollar line of credit to third parties as of Oct. 13, 2010, and limiting its ability to book new prepaid business without OTS approval.The OTS direcMve is based on an examination of the bank, which alleges that MetaBank engaged in unfair or deceptive acts or practices (UDAP) in violation of Section 5 of the FTC Act and OTS Advertising Regulation in connection with its operation of the iAdvance program.

A Top Tier Paycard Program’s paycard is from day one, an instant issue branded card (VISA is the market share leader). A card program that enables you to issue a VISA branded debit card at anytime, including replacement cards. A preferred paycard program is fully compliant, affording the employee at least 5 ways to access their “pay to the penny”, free of charge, starting the first day an employee’s card is issued.

A Top Tier Paycard Program will bank with an industry leader in paycards. Look for NBPCA Founding Member Banks A founding member of the Network Branded Prepaid Card Association (NBPCA) bank will have the goal to represent the common interests of the many players in this new and rapidly growing industry. By bringing together a cross-section of network branded prepaid card leaders during the industry's formative years, the NBPCA can serve as a catalyst and contributor to the long-term success of the prepaid marketplace. This group's focus on key industry issues to ensure the best consumer experience.

Who is the paycard provider’s issuing bank?

upon a particularly vulnerable demographic.

- Is your company required to disclose your audited financials?

- How long does it take to complete the due diligence process?

A Top Tier Paycard Program’s sponsoring bank will not require audited financials in order to comply with KYC Policies. All that that should be required is a simple questionnaire to be completed and a rare but possible site visit by an independent party (AML). Sponsoring bank approval times should typically be completed in fewer than 10 business days.

A Top Tier Paycard Program will be compliant to the “letter of the law” in all 50 States. The paycard provider should be willing to offer your company indemnification language regarding the compliance of their product. You paycard partner will work closely with their issuing banks to ensure the paycard product is compliant with all applicable banking regulations (BSA/AML, USA PATRIOT Act, Reg E, Privacy Regulations, etc). Your paycard provider should be at the forefront of compliance legislation. A paycard provider with expertise in the area of compliance will offer “peace of mind” as you roll out your paycard program within a single state or across the nation.

A Top Tier Paycard Program will utilize “card linking” technology eliminating the hassles associated with lost card replacement. “Card Linking” technology will ensure that your employee’s money is SAFE & SECURE and that they may gain access to their new card account as quickly as possible with little to no effort required of the payroll department. From the payroll department’s perspective, card replacements are a non-event with “card linking”.

• Employee can obtain new card instantly on-site or by mail.

• Balances transferred from lost card to new temporary card in real- time. • Under no circumstances should the payroll department need to update the direct deposit account number used to pay the employee, eliminating possible data entry errors • All replacement cards are linked to the original account number on paycard system.

The majority of paycard providers are not willing to indemnify your company regarding the compliance of their card in all of your states of operation. One has to ask themselves, why? If a paycard program is truly compliant to the “letter of the law”, indemnification should be a non-issue.

Lost and stolen cards can be a huge issue for companies of any size. A paycard program that doesn’t provide “true” card linking technology will create more time and effort for you and your employees. • A cumbersome process of lost or stolen card replacement inevitably leads to a negative cardholder experience. • Employees may not have access to their funds while waiting for a mailed replacement card. • Employees will not have access to all features of program with a PIN only replacement card. • Employees may be subject to transfer fees to bring over balances. • Required additional payroll data entry leads to data entry errors and card funding mishaps.

What are the due diligences required of the sponsoring bank?

Is the paycard compliant and will the paycard provider offer indemnification?

What is the process for lost or stolen card replacement? Does the paycard program offer the convenience of card linking for lost or stolen cards?

A Top Tier Paycard Program’s paycard platform should be built on a state of the art, industry leading, database that ensures the highest levels of data security, encryption and scalability. This insures that you and your cardholders will always have access to your information and balances. A paycard platform built on an Oracle database fulfills this requirement.

Several paycard back-end systems are built on a Microsoft SQL database structure. • This technological foundation may lead to future scalability issues. These in-turn lead to potential issues of reissuance of cards or worse, you and your employees not having access to their funds in a timely manner.

• Although widely used in general business Microsoft SQL is not considered an enterprise capable database product and lacks industry leading encryption capability.

What is the back-end database structure?

A Top Tier Paycard Program’s agreement should be SIMPLE and NOT require a long-term commitment. A paycard partner should earn your business every day and not feel the need to handcuff their clients to contractual obligations. They’ll earn your continued commitment by providing both the employer & cardholder with superior support and customer service.

• If at any time you are not satisfied, your company should contractually be allowed to exercise, without cause, a 60 day written notice of your intent to discontinue the card program without penalty. This approach will keep the provider on their toes and is the equivalent to a no cost exit for your company, if desired.

• Your paycard partner of choice, SHOULD BE WILLING to include the “cardholder fee schedule” within the contract.

The vast majority of paycard providers require an exclusive binding long-term 2 to 3 year agreement. That means your company is COMMITTED for the duration – good experience or bad.

• Can the Card Program change cardholder fees, such as Overdraft fees, during the term of the agreement? If so, ask why this is allowed considering you are bound to a long term agreement?

• Is the provider willing to include the “cardholder fee schedule” as part of the contract?

What are the contract terms?