A new, Atlanta-based company plans to introduce bank cards to the unbanked.
Directo Inc., brainchild of consultant T. Stephen Johnson, aims to be the middleman between banks and employers-mainly farms and factories-that have a large number of workers without bank accounts.
Instead of distributing paychecks, employers would deposit workers' funds into a bank account and issue debit-or Directo-cards, which employees would use to gain access to their funds.
"These employers have a big problem," Mr. Johnson said. "They have people leaving early on Friday to cash checks, and lost checks are wreaking havoc on their books."
The service will primarily target Hispanics, Mr. Johnson said. He estimated that 15 million people nationwide lack bank accounts.
To begin with, an employer must switch from issuing payroll checks to direct deposit. Employees with bank accounts would get their funds directly; others would open Directo accounts.
The Directo debit card could be used at automated teller machines and merchants, just as bank cards are. On payday, workers could withdraw all or part of their pay at an ATM.
For employers, the benefits are twofold, Mr. Johnson said: They would save the cost of printing and issuing checks and would not have to worry about employees leaving work to cash checks.
Employees benefit, Directo says, because the company's monthly fees will be far lower than the typical 10% check cashing fee.
Banks would split transaction fees with Directo while getting a steady stream of new deposits and using Directo as a selling point to lure commercial business.
"There is no question this is a way to attract business customers," said David D. Stovall, president of Habersham Bancorp, Cornelia, Ga.
Habersham, a $368 million-asset company with banks in northern Georgia, is one of the first to become partners with Directo. Mr. Stovall said he hopes to link up with at least one employer within a few months.
Directo is not the first company to target Hispanics who don't have bank accounts. In late 1997, Goleta (Calif.) National Bank bought an electronic paycheck firm that distributes cards, instead of paychecks, to the unbanked.
Experts on Hispanics in the United States said Mr. Johnson's idea is sound but could be a tough sell. "People roll through with scams all the time in the Hispanic community, so people are going to be suspicious," said Mike Leary, publisher of a Spanish newspaper in Raleigh, N.C. "If it doesn't work flawlessly, they are going to hear about it."
Mr. Johnson plans to begin the service in the Southeast and then franchise it nationwide. Directo said it has already gotten calls from asfar away as Monterrey, Mexico.