Goleta National Bank may have figured out the secret to making money from consumers who don't use banks: electronic paychecks.

The Goleta, Calif., bank last week bought a 70% stake in Electronic Paycheck LLC, a year-old company that sells systems allowing businesses to pay employees with stored-value cards instead of paper paychecks.

The acquisition gives the $80 million-asset bank access to cardholders, many of whom do not and never will have bank accounts, said Goleta executive vice president Randy Shaffer.

"We think what we're doing provides a service for those that have been forgotten" by the banking industry, said Mr. Shaffer. At the same time, he added, "we intend to make a profit."

Electronic paychecks work this way: Instead of issuing a paper paycheck, an employer issues a stored-value card loaded with the amount of the employee's pay. The employee can use the card in lieu of cash at any establishment that accepts debit-card payments or obtain cash at the handful of banks that accept the cards.

In California, Electronic Paycheck's main customers are farm owners. Farmers are particularly attracted to the service because many of their employees are migrant workers without bank accounts.

"From an employer's standpoint, an employee without a bank account is a pain in the neck," said Douglas King, Electronic Paycheck's president and founder.

Electronic Paycheck actually evolved out of a product Mr. King developed in 1994 for workers in Kazakhstan.

Because of volatility in that former Soviet state's banking industry, many Kazakhstan workers were reluctant to open bank accounts. At the same time, they objected to paying as much as $15 to cash their paychecks in check-cashing shops.

So Mr. King introduced an electronic paycheck that gave workers access to their funds through a network that included banks and merchants. According to Mr. King, workers embraced the greater security, employers enjoyed easier distribution, and merchants enjoyed greater volume.

Though Mr. King believes the U.S. market for electronic paychecks is limitless, he said his company couldn't have grown without the resources of a bank. The link with Goleta will let card recipients gain access to their cash at Goleta and at automated teller machines nationwide, he said.

Goleta's Mr. Shaffer said the bank will make its money by charging processing fees to employers. The bank also plans to charge "nominal" transaction fees to cardholders.

Hans Schroeder, an analyst at Torrey Pines Securities in San Diego, praised Goleta's acquisition. He said as many as one million consumers without bank accounts may live in California alone-all of whom could become electronic paycheck customers.

"The potential for this is huge," Mr. Schroeder said.

Electronic Paycheck's headquarters will be shifted from Santa Maria to Goleta's offices near Santa Barbara. Mr. King will remain with the company and be in charge of selling the technology to employers and check processing companies.

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