The Association for Convenience and Fuel Retailing (NACS) is launching its payroll cards right into the teeth of controversy rocking the industry. Here’s why one NACS executive sees as the advantages of electronic payments for the unbanked and underbanked.
In the midst of controversy, and legal issues, the payroll card industry is grabbing the types of headlines it doesn’t want. Just recently, the Russell Simmons-owned RushCard prepaid card suffered a glitch that left users without access to their paychecks. And there is a Pennsylvania-based legal battle brewing against McDonald’s over whether the fees charged on its employee cards are legal.
Against this backdrop, the Association for Convenience and Fuel Retailing (also sometimes referred to as the National Association of Convenience Stores, or NACS) has launched a payroll card program. Though the road may be a rocky one for the payroll card industry at large, the association is joining forces with First Data’s Money Network and MasterCard to unveil a payroll card program for underbanked employees of its member businesses.
The opportunity is a large one, as there are roughly 2 million workers in the United States that work at the convenience stores and fueling stations that make up the core NACS constituency.
In comments made to PYMNTS, Bill Deichler, director of the payroll solutions program at NACS, said that the payroll card program “gives the employee all the power of a bank account without the ability — or liability — of being able to overdraft the account,” a move the executive said would promote both security and fiscal discipline on the employee’s part. This latter measure is promoted based on what Deichler said is “a unique feature. After all, expenses and administrative fees are covered. NACS plans to provide an annual cashback award to the cardholder based on the actual debit card use.”
Given the nationwide presence of its membership, NACS sought a partner that could help customize payroll solutions, partnering with the Money Network, which in turn provides 2.3 million cards annually, with about $18 billion in total disbursements, said Deichler. That helps address the needs of the convenience store and fueling station employee population, where Deichler said as many as 25 percent to 30 percent of individuals are underbanked or entirely unbanked.
And yet the NACS is ramping up its payroll presence while there may be continued, and possibly increased, pushback against the use of payroll cards. Deichler posited that that reluctance may have its roots in a number of reasons.
“There are some employees that just want to see and feel the paper check in their hands each pay period,” he said. That usually changes once the employee realizes the benefits tied to the program, said Deichler, including “not having to go and pick up the paycheck or waiting in line to cash the check, which usually means paying a fee to cash it.” Plus, he added, there is the convenience of debit transactions, which offers a salve as employees do not have to “carry large amounts of cash,” noted Deichler.
Referring specifically to the controversy over fees seen with other payroll card programs — and lawsuits that have challenged those fees — NACS has said it sidesteps that issue entirely. That’s because payroll cards that are issued through the NACS/First Data/MasterCard partnership do not come with attendant fees across POS. There are also no loading or offloading paycheck fees or overdraft fees. For now, it remains to be seen whether convenience fuels adoption.