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Okla. Banks Work Together
To Offer Payroll Cards
By Ben Jackson
American Heritage Bank has begun offering payroll cards provided by Central National Bank & Trust Co. and its processing subsidiary, Interactive Transaction Services.
Based in Sapulpa, Okla., American Heritage provides the cards, and the $517 million-asset Central National, which is based in Enid, Okla., issues the cards, says Brud Baker, Central National president and CEO. "Our role in this is as a transaction processor and issuer," Baker says.
Cardholders can use the card anywhere Visa is accepted and withdraw money for a $1.50 fee, Amanda Thompson, American Heritage assistant cashier.
Central National shares interchange income with American Heritage.
"It is a pure revenue share with the banks. It doesn't cost them anything," Baker says of Central National's cards.
American Heritage decided to offer the card after business customers requested it, Thompson says. It has signed up two customers so far.
"We had a couple of business customers who had some employees who weren't able or didn't want to open checking accounts at any bank," Thompson says. "They were wondering what their alternative was to get them their payroll."
Many of the customers who cannot open a regular checking account are in the Chex Systems Inc. database, she says.
Woodbury, Minn.-based Chex Systems is a network of financial institutions that puts information on what it calls "mishandled" checking and savings account in a central database. Financial institutions use Chex Systems to determine the risks of opening an account.
Mostly construction companies have expressed interest in the cards, Thompson says.
Central National offers payroll cards, gift cards and general-purpose prepaid cards to other banks and has customers that include 12 banks in such states as California, Illinois, Missouri and Texas, Baker says. It can issue Visa, MasterCard and Discover cards.
Central National markets prepaid cards to unbanked consumers. The cards give the bank an opportunity to attract new customers who might not otherwise use a bank because issuing a card to a consumer does not require as much documentation as opening an individual account.
Banks can watch how consumers use the cards to determine if any are potential customers for their other products, Baker says.
"We think the banks that are using these products will cherry pick some of the customers for accounts," Baker says.
The cards from the $617 million-asset American Heritage do not offer online bill payment or savings, Thompson says. Cardholders can use the phone or visit a dedicated Web site to review their transactions, check balances and change their personal identification numbers, she says.
Central National can offer cards with features that include international funds transfers and the ability to reload funds through the Green Dot Network and at bank tellers, Baker says.
"It is really driven by the marketing desires of the bank and where the branches are located," Baker says.
Central National also offers gift cards, which have less potential for profit than other prepaid cards because consumers tend to use them once and throw them away, Baker says.
Customers tend to reload other prepaid cards, providing banks with a long-term income stream.
"We wanted to offer gift cards because it is part of the market, it is easy to do and some people love it," Baker says. "Where we really see the future is reloadable cards–payroll cards and other reloadable-style cards."
American Heritage Bank has begun offering payroll cards provided by Central National Bank & Trust Co. and its processing subsidiary, Interactive Transaction Services.
Based in Sapulpa, Okla., American Heritage provides the cards, and the $517 million-asset Central National, which is based in Enid, Okla., issues the cards, says Brud Baker, Central National president and CEO. "Our role in this is as a transaction processor and issuer," Baker says.
Cardholders can use the card anywhere Visa is accepted and withdraw money for a $1.50 fee, Amanda Thompson, American Heritage assistant cashier.
Central National shares interchange income with American Heritage.
"It is a pure revenue share with the banks. It doesn't cost them anything," Baker says of Central National's cards.
American Heritage decided to offer the card after business customers requested it, Thompson says. It has signed up two customers so far.
"We had a couple of business customers who had some employees who weren't able or didn't want to open checking accounts at any bank," Thompson says. "They were wondering what their alternative was to get them their payroll."
Many of the customers who cannot open a regular checking account are in the Chex Systems Inc. database, she says.
Woodbury, Minn.-based Chex Systems is a network of financial institutions that puts information on what it calls "mishandled" checking and savings account in a central database. Financial institutions use Chex Systems to determine the risks of opening an account.
Mostly construction companies have expressed interest in the cards, Thompson says.
Central National offers payroll cards, gift cards and general-purpose prepaid cards to other banks and has customers that include 12 banks in such states as California, Illinois, Missouri and Texas, Baker says. It can issue Visa, MasterCard and Discover cards.
Central National markets prepaid cards to unbanked consumers. The cards give the bank an opportunity to attract new customers who might not otherwise use a bank because issuing a card to a consumer does not require as much documentation as opening an individual account.
Banks can watch how consumers use the cards to determine if any are potential customers for their other products, Baker says.
"We think the banks that are using these products will cherry pick some of the customers for accounts," Baker says.
The cards from the $617 million-asset American Heritage do not offer online bill payment or savings, Thompson says. Cardholders can use the phone or visit a dedicated Web site to review their transactions, check balances and change their personal identification numbers, she says.
Central National can offer cards with features that include international funds transfers and the ability to reload funds through the Green Dot Network and at bank tellers, Baker says.
"It is really driven by the marketing desires of the bank and where the branches are located," Baker says.
Central National also offers gift cards, which have less potential for profit than other prepaid cards because consumers tend to use them once and throw them away, Baker says.
Customers tend to reload other prepaid cards, providing banks with a long-term income stream.
"We wanted to offer gift cards because it is part of the market, it is easy to do and some people love it," Baker says. "Where we really see the future is reloadable cards–payroll cards and other reloadable-style cards."
