Payroll Cards Earn Top Grades from CFSI—Except in One Area
The payroll card industry received high marks for its standards and its ability to “stretch beyond the basics,” according to a new report from the Center for Financial Services Innovation. But CFSI’s first-ever “Payroll Industry Scorecard” gave the industry an average mark for its ability to provide additional services that “improve customers’ lives.”
The CFSI analyzed eight payroll cards programs that account for approximately 75 percent of the U.S. payroll card industry to arrive at its findings. Those payroll card program managers, which include several Pay Award winners, are ADP, Comdata, First Data, Global Cash Card, Netspend, Transcard, UniRush LLC and U.S. Bank. At last count, about 8.7 million workers received wages via payroll cards, CFSI said. That compares with some 5.5 million workers who received wages via paper checks.
The purpose of the scorecard was to “contribute to the dialogue about payroll cards,” according to the nonprofit organization. Thea Garon, a CFSI manager who wrote the report with Kate Flocken, recently wrote a Viewpoint for Paybefore to debunk some common myths about payroll cards, which continue to face scrutiny from regulators. “What we found was encouraging: The payroll cards in our sample offer many of the basic features and functionality to be considered high-quality products. But opportunities remain for program managers to stretch beyond the basics by offering additional features that can help cardholders build long-term and lasting financial health,” she wrote.
A snapshot of the grades shows some of the strengths and areas for improvement for the country’s major payroll card programs.
Core Features, A-
These are defined as “standards for a high-quality payroll account.” Such areas as security, access and personalization were among the highest-scoring features in this category, with affordability and transparency lagging behind. For transparency, “few program managers offer additional tools, such as online videos and tutorials, that can help cardholders derive the most value from their cards,” the report said.
Stretch Features, B+
These are defined as “best practices for providers to stretch beyond the basics.” The areas with the highest marks include mobile features and portability, with convenience and education earning lower grades. When it comes to education, for example, “few programs train customer service agents to routinely use calls as an opportunity to review employees’ accounts, identify unnecessary fees, and explain how they can avoid those fees in the future.”
Next Gen Features, C-
These are defined as “additional services that improve consumers’ lives.” Both budgeting and savings stand out as categories that need work. “Only a handful of the programs in our sample allow employees to link their payroll card to a separate savings platform. Such platforms allow employees to set aside money for future expenses and to be resilient in the face of unexpected events.”