Paycards Aim To Take Down Their Bad Rep

The paycard has had a tough go of it lately, as measured by back and forth in the financial trade press and by the increased glare of regulators looking at where, when and how the cards can be used. The movement to bring unbanked and underbanked workers away from the limitations of cash and into electronic transactions is one that has been given lots of ink, virtual and otherwise.

In one recent announcement that shed some additional light on electronic payroll and financial inclusion, Avionté Staffing Software said it has a new tech partnership in place with rapid! PayCard, tied to Avionté version 16.1. That partnership serves the staffing software firm’s 400 staffing clients, with emphasis on electronic payments.

Chris Ruppel, who serves as rapid! PayCard’s senior vice president, told PYMNTS that the overall trend for paycards has been a positive one, with momentum seen since 2009 and initial periods of education necessary for business owners. The effect has been one where larger employers have adopted the cards most readily (as they have higher costs of actually processing payroll and logistical challenges of doing that on a consistent basis), with usage seen relatively lighter in the smaller-sized firms with unbanked employees.

So, too, explained Ruppel, has it been necessary to educate the consumers who eventually would come to rely on that payment methodology. Ruppel said that there are some assertions by critics that the cards have hidden costs or fees tied to them that, in fact, make them more expensive to pursue than paper checks. For the unbanked, noted the executive, check cashing and other services take significant fees versus cards, which, unlike some bank accounts, “require no minimum balance.” For employers, there is the risk of noncompliance with some state laws (depending on the state), and as a result, “we have to help with education,” especially as state-level and federal-level forces come to bear on the industry.

Mobile functionality is an important part of daily financial management, and apps are finding increasing adoption. Rapid! PayCard has enabled users to log in and activate cards through devices and check balances, among other functions. One trend that comes in tandem with that technological advance — managing financial activity through mobile channels — is the use of prepaid cards by millennials, who are more tech-savvy and also tend to have a relatively higher-income profile than other groups. That demographic has, according to third-party research by Visa, been prone to feel that traditional banking relationships and accounts are too costly in terms of fees and time.