PayDay Cards
From the June 2002 Issue of CardTrak
      When in comes to getting paid by your employer nothing beats direct deposit. Last year, the number of direct deposits increased by 11.6%, to 3.7 billion payments. Besides payroll, direct deposit is also used for expense and travel reimbursement, pension and annuity payments, interest payments, retirement and mutual fund distributions, Social Security, Veterans and other government benefits, and tax refunds. The value of these direct deposits was more than $4 trillion in 2001.

This is fine and dandy, as long as you have a bank account somewhere.

Believe it or not, between 12 and 15 million households, or 20% of the U.S. population, do not have a banking relationship. There are perhaps as many as 60 million bankless consumers in the USA. Analysts project that this group of unbanked consumers spend about $8 billion annually in check cashing and other financial service fees.

The solution: a payroll card funded by direct payment, that can be used to withdraw cash, make purchases, or pay bills.

Last year VISA introduced such a card. This year, employers are beginning to catch on to the concept.

The VISA Payroll card is issued by Bank of America, Bank One, First Tennessee, FleetBoston and U.S. Bancorp.

Here is a rundown of the some of the current payroll cards:
STRATUS CARD
U.S. Bank and Atlanta-based Skylight Financial offer the Stratus PayCard Account. The pre-approved Stratus PayCard Account is an FDIC insured, checkless account. The card can be used to withdraw cash at over 200,000 ATMs (over 9,000 of those are surcharge free), and over 800,000 point-of-sale locations. Skylight Corporation initially formed an alliance with Firstar Bank in August 2000 to offer the "Stratus Card." Firstar has since merged with U.S. Bank. Skylight has relationships with 75 companies to-date and has cardholders from 63 of the top Fortune 100 companies.

PAYMAXX VISA
Internet payroll pioneer PayMaxx and BankTennessee teamed to deliver the VISA debit card enabling employees to make purchases and withdraw money at ATMs and POS locations worldwide. Under the program, employees receive monthly statements and have access to a toll-free customer service line and 24-hour toll-free, bilingual, instant account information line. Payroll funds are directly deposited into the VISA accounts every payday. PayMaxx is targeting the hospitality, manufacturing, fast food, and trucking industries for the debit card product. The card is honored by the Plus and Star debit systems, as well as 600,000 ATMs.

CASHLYNK CARD
Lynk Systems has implemented its CashLynk electronic payroll card for Spartan Staffing, Inc. Spartan is one of the largest specialized providers of labor and light industrial supplemental workers in the Southeast. By switching from traditional payroll to CashLynk, Spartan will significantly improve efficiency by eliminating all the time and costs associated with issuing paper checks to 2,500 supplemental workers on a daily basis. Spartan will use CashLynk to pay supplemental workers who are primarily heavy laborers in the construction, landscaping, maintenance and sanitation industries. In turn, each worker can take advantage of CashLynk's flexibility to make debit card purchases, ATM withdrawals, and long distance calls with low rates and no hidden charges. They can also transfer funds to a checking or savings account, or to an associated CashLynk account for a family member.

OVER-THE-ROAD CARD
Used by Class 7 and 8 long-haul truckers, the Fleet One Over The Road card program offers purchasing power for fuel and maintenance plus provides ATM service for authorized cardholders, payroll services, and insurance coverage. Fleet One recently combined with the TransPlatinum Plus product line under the Fleet One name. The Nashville, Tenn.-based company provides electronic payment authorization and billing, financial settlement, credit card processing and a host of other services for fleets consisting of all sizes and classes of vehicles. Fleet One is a subsidiary of National Commerce Financial Corporation.

E-DUCTION MASTERCARD
While actually not a payroll card, the e-Duction MasterCard is linked to a payroll. With the e-Duction MasterCard, employees can e-Duct their purchases over two to six months, interest-free. Employee purchases are deducted from future paychecks. For example, an employee purchasing a $200 camera, will have $50 deducted from each of the next four biweekly paychecks. Credit limits are set at 2.5% of annual gross salary.

BENNY MASTERCARD
Another payroll-related card comes from a Connecticut firm which launched a special purpose stored-value MasterCard to simplify and broaden the use of health care flexible spending accounts. Evolution Health's Benny Card enables employees to make their co-pay or other qualified expense in real-time by automatically deducting the transaction from the FSA account. Cardholders can also access the BennyCard Web site to view transaction history and monitor their balance. FSAs permit employees to use their own payroll funds on a pre-tax basis to pay for out-of-pocket health care costs. Under current FSA plans, employees have to pay up front for their uncovered expenses, save all their receipts, then remember to send them in to get reimbursed by check from their own FSA funds. One of the first clients for the new card is CT-based Northeast Utilities.

Other payroll cards are in the works too. If you do not have a bank account and are paying someone to cash your checks start bugging your employer to check out the new payroll cards.

A number of new cards will hit the market this summer:
CIRCUIT CITY PLUS VISA
Circuit City plans to launch an in-house, co-branded VISA card. First North American National Bank, a banking subsidiary of Circuit City, will issue the new Circuit City PLUS VISA beginning in mid-June. FNANB, which currently has about two million VISA cardholders, is a specialist in the sub-prime market. The new Circuit City PLUS Visa credit card features no annual fee; access to special Circuit City promotions, including zero percent financing; and a 60-day guaranteed low-price program applicable to purchases at most retail stores.Card interest rates will vary from 15.9% to 24.0%, depending on credit rating. The card will also participate in the Upromise college savings program. Circuit City is the exclusive national consumer electronics retailer for the Upromise college savings program. The new card is the first co-branded VISA credit card from a national consumer electronics specialty retailer.

SATURN CARD
Household and Saturn Corporation have partnered to launch a private label credit card this month. The Saturn Card will offer customers the ability to finance parts and accessories purchases and receive special product and financing offers from Saturn's 438 retailers across the USA. The Saturn Card extends the Household-GM relationship, which began with the 1992 launch of the GM MasterCard, a program that now has over six million members. MBNA AEROPLAN Air Canada and MBNA will launch a co-branded credit card program in the USA this summer. The long-term agreement will allow U.S. residents who hold Aeroplan Platinum Plus, Preferred and Quantum credit cards to accumulate Aeroplan Miles that can be redeemed for reward travel. Cardholders will earn one Aeroplan Mile for every one dollar spent on eligible purchases. Air Canada currently has more than 80 partners in its Aeroplan loyalty program. More than six million members, including approximately 400,000 in the United States, earn Aeroplan Miles toward reward travel to destinations served by Air Canada, its regional airline, Air Canada Jazz, and worldwide partner airlines comprising the Star Alliance network.

FORD CARD
Ford Motor Company and GE Card Services confirmed they have begun a national launch of a new national private label credit card. The no annual fee, Quality Care Auto Service Card offers instant credit and same-as-cash financing with no payments for 90 days to qualified Ford, Lincoln, and Mercury customers. The nationwide rollout to all Ford, Lincoln, and Mercury dealers follows a successful test of the program in Texas and Oklahoma. More than 220 dealers enrolled and participated in the test. The program will be rolled out nationwide over three months, starting this week. GE says the key benefits include the ability to offer on-the-spot financing, promotional financing terms up to 12 months, low merchant discount rates, payment for credit card sales within two business days, and electronic processing of transactions. The dealer's name is also embossed on the card to enhance customer loyalty. And finally an assessment of the smart card migration in the USA . . .

SMART CARDS
Security Sciences International says the USA will trail Asia-Pacific in smart cards for at least 10 years. The research firm says the U.S. market is plagued with customer and vendor misconceptions about the cost-benefits and unbreakable security technologies inherent in smart card designs. However, Asian government agencies, corporations, and end-users have shown a greater willingness to adopt smart card technologies. For example, the Philippines, where 22 million new smart card drivers' licenses have been issued. In Taiwan advanced smart cards are being used at Starbucks locations, where customers receive a 20% discount on purchases through a smart stored-value card. Singapore, China, and South Korea have all implemented smart card transportation systems that can be used on trains, buses, or subways. SSI says these smart card systems have increased transportation revenue by 40%, reduced the number of inspectors required, and curtailed fare fraud.