Payroll cards, which have circulated for several years but without flourishing, may get a big lift from partnerships with surcharge-free automated teller machine networks, say the companies that have struck such deals.
Fresh from signing new payroll card contracts, two surcharge-free networks, Allpoint and MoneyPass, say all the programs needed was a wider transaction network. And issuers acknowledge that ATM surcharges have stymied payroll cards, which allow employees without traditional banking accounts to receive their salaries through ATMs.
Both Allpoint and Genpass Inc.'s MoneyPass are casting their networks as the answer for payroll card issuers. Those companies, in turn, could boost their ATM volume.
Bank One Corp. announced Thursday that it had agreed to give its payroll cardholders access to the 25,000 surcharge-free ATMs in the Allpoint network. The Chicago banking company's payroll Direct Card also disburses financial aid, scholarships, and grants.
Ron Hynes, Bank One's senior vice president of prepaid solutions, said the 8-year-old Direct Card program has been slow to attract users. What was missing was a "national cash-access footprint" that was also surcharge-free, he said. "As we begin to integrate [Allpoint] more into our marketing plans, we'll definitely see the volumes increase," Mr. Hynes said.
Ben Psillas, the president and founder of Allpoint, which is owned by ATM National Inc. in Washington, said companies hesitate to offer payroll cards because of the recurring ATM fees. He said Allpoint has been making the rounds "to educate employers that there are options out there for surcharge-free access."
Genpass, of Fort Washington, Pa., enrolled Florida Citizens Bank of Gainesville last month as an issuer of its PayCard program, which can run through MoneyPass. Genpass says about 62 credit unions use the platform.
Bipin C. Shah, Genpass' president and chief executive officer, said that though PayCard was not designed as a joint product with MoneyPass, it relies on the built-in distribution. "PayCard needs a surcharge-free transaction," he said. MoneyPass access gives employees another incentive to sign up, he said.
Florida Citizens Bank is among the issuers using payroll cards as an introductory product for unbanked consumers.
Mr. Psillas of Allpoint said payroll cardholders often use ATMs as regularly as other bank customers do.
Money Network, a payroll card vendor in Memphis, joined Allpoint a year and a half ago. Mark Putman, Money Network's chief marketing officer, said its card base has grown from around 20,000 to more than half a million in that period.
Money Network, which is 30% owned by First Data Corp., issues or will issue payroll cards for companies including American Airlines, Kmart Corp., and AutoZone Inc. The vendor, which also uses First Data's StarSF and Sum surcharge-free networks (Sum is run by NYCE, which First Data will soon divest), says it offers payroll cardholders a network of about 50,000 ATMs.
Mr. Putman said payroll cards should cost the consumer no more than $7 a month to use. If costs are kept low, employers "can present it to the employee as a savings benefit" and then save money themselves on the costs of issuing paychecks.
Mr. Psillas said unbanked employees who are paid by paper check typically pay an extra 3% to 8% for a cashing service. Employers can also impose a monthly fee on payroll card accounts.
Fiserv Solutions Inc. of Brookfield, Wis., uses the Allpoint network for its Paycheck Plus payroll card program. Jackie Binks, the product manager for stored value solutions at Fiserv, called surcharge-free ATM access a central selling point of its payroll card program. Employers "don't want their employees to have to pay surcharges to access their salaries. It's a condition of the program," he said.
Last week Fiserv announced that it had signed Darden Restaurants Inc. of Orlando for Paycheck Plus. Darden runs such chains as Red Lobster and Olive Garden.
