Debit cards: Unbanked: New Market

Unbanked workers could soon bypass long lines and expensive fees usually found at check cashing sites once Goleta National Bank's Electronic Paycheck begins its national roll-out of employee payroll debit cards.

The recently acquired Electronic Paycheck system, developed for factory workers in the former Soviet republic of Kazakhstan, now operates on a private network for agricultural workers in California. "Banks want to do all direct deposit, and employers really want to do direct deposit, but the kink is you've got... employees who can't take direct deposit," says Douglas King, a principal of Electronic Paycheck. "That's our niche."

California-based, $97 million-asset Goleta, through its holding company Community West Bancshares, will market the product nationally through payroll companies. Thus payroll processors and not corporate end users will be the bank's customers. Corporate users will be charged a fee for each payroll cycle, and employees will be charged an ATM-like fee for withdrawals, says Goleta president and CEO Lew Stone.

The bank is planning to have its card accepted by ATM networks internationally. It is also building a merchant network-national supermarket chains, for example-that would allow employees to access paychecks at no charge. The total doesn't have to be withdrawn from the network all at once, so migrant workers could use the card to allow a family member in another country to access the funds and eliminate the need for money orders, Stone says.

When the bank takes over Electronic Paycheck it will replace the private network, and operate a debit product on the ACH network.

In the future, Stone envisions employees using cards for traditional expense account purchases. The system would debit the purchase from a corporate account and give the company a report broken down by user.

-sausner tfn.com