is impossible for ideas to compete in the marketplace if no forum for
Label Debit Cards
The Business Forum recently organized a discussion for PSCA, Inc. at the Wilshire Grand Hotel, Los Angeles, California.
Those accepting our invitation included:
VP Human Resources,Bobrick Washroom Company * Director, Parish & Community Services, - Catholic Charities of Los Angeles, Inc. * Director of Human Resources, DataDirect Networks, Inc. * CFO/ Director of Finance - Distribution & Auto Services Inc. * HR Director, - Gensler Associates * CEO, International Field Works, Inc. Director of Human Resources, International Media Group * Controller, KSCI-TV Controller, Los Angeles Country Club * Director of IT, Merle Norman Cosmetics Inc. * Director of HRIS, Nestle USA Inc. * Program Manager, Northrop Grumman Corporation * Benefits Manager, Paul, Hastings, Janofsky & Walker LLP * Financial Controller, Paul, Hastings, Janofsky & Walker LLP * President, PSCA, Inc.* COO, RemoteNet Inc. * Manager Human Resources, Sony Pictures Entertainment * Controller, South Coast Water District * General Manager, South Coast Water District * Director of Human Resources, South Coast Water District * Risk Manager Consultant, Thomas Loss Control Inc. * President, Trans U.S. Agency, Inc. * AVP. Senior Recruiter, Union Bank of California * Divisional Manager, Watson Wyatt Corporation * Assistant Vice President, Human Resources, Wherehouse Entertainment, Inc. * Payroll Manager, Wherehouse Entertainment, Inc. * Vice President Information Systems, William O'Neil & Co., Inc. (Investor's Daily) * Vice President Human Resources, Worldwide Restaurant Concepts, Inc.
For the benefit of those of our members and
supporters who could not PRIVATE
LABEL DEBIT CARDS:
Author: Dr. Robert J.
Houchin Sponsored by Prolific
LABEL DEBIT CARDS:
Author: Dr. Robert J. Houchin
Sponsored by Prolific Consulting, Inc.
Private Label Debit
Cards offer the convenience, speed, and safety both you and your employees
will enjoy. Instead of spending time and money handing out or mailing
paper checks for employees to deposit, cash or risk losing, now,
you may offer them the advantages of Direct Deposit Payroll even if the
employee lacks a conventional bank account.
electronic payment solution does not require a checking account so anyone on
your payroll may sign up for it. When you consider everything that it
offers it is easy to see why this is an attractive option for employer and
The Direct Deposit
Card is an ideal way for companies to eliminate the costly and time
consuming payroll check writing and reconciliation process. Companies
save an average of $1.25 per payment by using direct deposit instead of
checks. In addition, Administration Costs are reduced by
as much as 50%. It eliminates the cost of delivering checks to
employees at different locations as well as the costs of printing and the
cost of the paper itself. It eliminates the costs of lost or stolen
checks and the resulting charges for stop payment and check replacement.
The FBI estimates that over 4 million payroll checks are stolen annually.
In addition to the
immediate cost savings provided by direct deposit payroll programs, some
Private Label Direct Deposit Payroll Cards actually Pay Commissions to the
Employer from the transaction fees charged when the cards are utilized.
For the employee who requests additional cards for use by the spouse and/or
children, these commissions can become substantial and may be $20.00 a
month per employee. When added to the $5.00 monthly savings provided
by the switch to direct deposit, the monthly savings per employee reaches
Benefits of a
For the employer,
the prepaid payroll card provides all the benefits associated with direct
deposit: reduced costs, enhanced efficiency, increased
employee productivity and satisfaction.
Costs: The payroll card helps reduce expenses associated with
paper payroll processing, exception and special payment checks such as
when employees are on vacation or out of the office, lost and stolen
checks including stop payment fees, fraudulent cashing of duplicate
checks, check printing, storing of tendered checks,
retention and reconciliation costs. It can actually pay commission
revenue to the employer based on sharing with the employer a portion of the
transaction fees charged. How many banks are presently paying you to
deposit your employee's payroll payments with them? Alternatively, the
employer may choose to pass this savings back to the employees in the form
of a reduction in the fees charged to the card holder. Can you
imagine Payroll Processing as a Profit Center rather than an Expense?
Efficiency: The payroll card can be used in a variety of ways such
as prepaying or reimbursing business expenses, making bonus and award
payments, issuing final payment and disaster recovery—all without writing
Employee Productivity and Satisfaction: As with direct
deposit, trips to the bank or check cashing stores are eliminated and
employees get their pay on payday, no matter where they are.
Some employees spend an average of three workdays per year just going to the
bank to deposit their paper payroll checks, frequently on the employer's
time. Once the card is funded, employees can get cash from an ATM,
cash back from certain merchants and make normal debit card purchases at
over 21 million retail locations worldwide. They will be able to
arrange for automatic bill payments, card-to-card funds transfers,
transfer to bank accounts, make purchases online, reserve a
hotel room, make an airline reservation, even rent a car.
No more check cashing fees to pay or asking relatives to cash their checks
Like Direct Deposit: Ninety-Seven Percent of the more than 62
Million employees presently using direct deposit are very satisfied with it.
More than Fifty-Four Percent of US payrolls are currently paid by direct
deposit. Recently, US Sprint made direct deposit payroll
mandatory for its 88,000 employees. The US Treasury is the largest
user of stored value card technology in North America.
What, Exactly, Is
a Private Label Debit Card?
Private Label Debit
Cards are Bank Sponsored, MasterCard Licensed, ATM/Debit (Stored Value)
Cards. They look like a credit card but they are not. They look
like a debit card but that is not what they are either. They are not
smart cards but they do act like them.
What they are:
* Debit Card – enabling the cardholder to
make purchases at business establishments that accept debit cards.
It is not a credit card, purchases are limited to the value of the card
account at the time. Cardholder will enter a PIN (Personal
Identification Number). Printed on the back of the card are the logos
of the debit networks identities where the card may be used (Star, Cirrus,
* Debit Card with MasterCard or Visa Hologram –
may be used at point of sale with either Signature or PIN. Can be used
anywhere either MasterCard or Visa are accepted.
* ATM Card – may be used at automated
teller machines to obtain cash. With the associated network capability
of the cards there are over 1 Million ATM locations worldwide where a
cardholder may withdraw cash from the card.
* Funds Transfer Card – may be used to
transfer account values (funds) to another card. Employees may request
additional cards which they may use with other family members or relatives.
Each card has its own PIN, therefore, giving the employee control.
This will save the employee who routinely sends money to family members
overseas or students at college significant expense when compared to the
costs incurred at Western Union and MoneyGram methods as well as the time
involved in the purchase and shipping of these forms of funds transfer.
This is all done instantly via toll free customer service lines,
following the prompts to transfer the desired amounts to other cards.
Presently over $41 Billion annually is sent to relatives and family outside
the United States. Over $9 Billion annually from California to Mexico
alone. The Nilson Report forecasts that this will grow to 280 million
transactions worth $108 Billion by 2005.
* Electronic Bill Payments – enables the
card holder with the ability to arrange for many routine bills to be paid
electronically to service providers. No longer having to get a money
order and deliver or mail payments to the utility or telephone company as an
example. Presently, over 975 million money orders purchased annually.
utilization is the fastest growing financial instrument worldwide.
Last year debit card transactions exceeded credit card transactions in both
the United States and Canada. The number of Direct Deposits increased
by 11.6 % in 2001 from 3.3 Billion to 3.7 Billion payments. Direct
Deposit is used for payroll, 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 exceeded $4 Trillion
with an average of $1,195.00 per transaction.
And The Survey
For those employees
who refuse direct deposit, what are the three most prominent reasons?
* 57% Do not trust the technology
* 54% Fear loss of control
* 50% No Bank Account
experiencing a cost savings?
* 63% Yes
If Yes, How
* 53% Said they were saving $0.01 to $0.50 per payment
* 47% Said they were saving $0.51 to $12.00 per payment
In your opinion,
what is the value of direct deposit to your company?
* 44% Very High Value
* 34% High Value
* 19% Moderate Value
* 2% Low Value
* 0.25% Very Low Value
(See Links at Bottom for Entire Survey)
Virtually the only
objection raised is the recurring transaction costs to the cardholder which
average $10.00 to $15.00 per month with normal usage. Education
is the key to overcoming this objection. The primary consideration in
the use of the Private Label Debit Card is that the recipient is "Unbankable."
They lack conventional bank accounts and credit cards. As such,
they are presently paying fees of 3% to 8% [average 5%] just to cash their
paychecks. A ten dollar an hour employee is spending over $1,000.00
annually [$87.00 Monthly] just to cash their weekly paycheck.
Add to this the expense of paying normal household bills [22 money orders
per month] which adds another $16.00 to their monthly expenses and for those
who send money overseas, an expense averaging $50.00 to $60.00 per
transaction, and it is immediately apparent that the employer is actually
saving the employee $1,500.00 to several thousand dollars annually by
implementing Direct Deposit Payroll using Private Label Debit Card
Most people forget
that the average cost of a checking account is $218.00 a year plus another
$20.00 to have the checks printed. At $238.00 a year the average
checking account costs $20.00 per month.
An even more
stunning comparison. The average American has 12 credit cards at 19%
interest and an $8,500.00 balance. A monthly minimum payment of
$212.50 will take 396 months [33 years] to pay off the balance and cost
$36.00 per month [$14,228.50] in interest plus another $5.00 per month in
annual card member fees for a total of $41.00 per month. Private
Label Debit Cards at $10.00 to $15.00 per month are 75% cheaper to utilize.
Multiple Cards In
Money Transfer Card
Prepaid Wireless Purchase Card
Prepaid Calling Card
Benefit Card Allowance
Claims Payment Card Online
If you can
think of it, Private Label Debit Cards can do it!
Direct Deposit and Process
The employer enters
into an Agreement directly with the Processor to effect the transfer of
payroll funds from the employer to the employee's Card Account.
purchase cards for each employee to receive employment compensation by
direct deposit. These may be generic (No Visa or MasterCard logo) PIN
Cards or cards with the MasterCard or Visa logo. The card account
numbers are registered with the Processor and with the Sponsoring Bank in
behalf of each employee.
disbursement of employee payroll the employer will either one day prior to
the payment date effect a wire transfer to the card depository account or
three days prior to the payment date effect an ACH electronic funds transfer
to the card depository account.
forward in electronic format a batch file 24 hours prior to the date of
payroll processing payment listing the names and card numbers of each
employee with the specific dollar amounts to be credited to each cardholder.
Employer may elect
to have pay stubs which can be uploaded from a secure web site for the
employee to print out or mailed to the employee.
Employer may elect
to have W-2 Forms at the end of the year which can be either uploaded from a
secure web site for the employee to print out or mailed to the employee.
The Bottom Line
has heard the axiom, "The Fastest Way to Increased Profits is to Reduce
Expenses." While it seems obvious that every dollar of
reduction in costs increases profits by the same dollar amount it is also
easy to overlook the true meaning of savings, which may appear to be modest
at first glance. The true value of any cost reduction program becomes
readily apparent when we compare to the amount of increased production that
would be required to achieve the same result.
Any business with a 4% Net will require a $25.00 increase in production to
achieve a $1.00 increase in Net Income. The exact same increase
in Net Income is achieved with a $1.00 reduction in Expenses. In
these terms then a $100,000.00 reduction in Expenses is the Equivalent of a
$2,500,000.00 increase in Production. A business with
1,000 employees achieving the $25.00 per month savings previously referenced
will save $300,000.00 annually. The Equivalent of a $7,500,000.00
increase in Production. For a business with 10,000 employees the
savings would be the equivalent of a $75,000,000.00 Annual Increase in
Some companies have
as many individuals on pension as they have active employees. What
happens when pension benefits are also paid with Payroll Cards?
The question is not,
"Will your company be using Private Label Debit Card Direct Deposit
Payroll?" The question is, "When will you begin?"
Pay Media Survey
Findings by Individual
The Guide to
Successful Direct Deposit
For further information, contact:
For further information, contact:
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