Solving human resource payment challenges with open network prepaid products

Money does indeed make the world go around. As human resource professionals, we are keenly aware of the different roles money plays in our day-to-day activities.

Payroll. Benefits. Incentives. Travel. Expenses. Recruiting.
The above are just some of the activities we face each day requiring the movement of money from corporate accounts into employee, prospective employee and partner hands accurately, safely, and efficiently. And in today’s post Sarbanes-Oxley environment, anytime money and information move, the audit trail is of paramount importance.

Payment related challenges are everywhere.
Paying remote employees who don’t have a checking account. Managing travel expenses. Substantiating employee flexible spending and benefit account purchases. Inspiring employees and channel partners to reach higher performance levels. Making onsite corporate visits easy and affordable for a prospective employee.

In this article we’ll take a look at how some of these activities are being addressed with innovative products and services that utilize the bank issued open network (Visa, Mastercard and Discover) prepaid card products. We’ll also discuss the benefits of working directly with a bank partner such as Prepaid Solutions USA, a service of West Suburban Bank in Chicago to reach these efficiencies.

Payroll card payoff.
Steven is the payroll manager for a chain of 44 casual dining breakfast oriented restaurants based in the Midwest. The company’s restaurants are located throughout the US, payroll happens weekly and over 60% of their 1,800 employees (1,080) are ineligible for traditional direct deposit to banking accounts. In order to pay these employees paper checks must be delivered directly to the restaurants where they work each week. It costs an average of $25 per location per week to overnight payroll checks to 45 locations each week, adding up to over $58,500 annually.

Employees receiving the paper checks typically take them to check cashing facilities where they may pay up to 5% to have them cashed. The average restaurant employee receiving a paper check nets $300 per week and pays an average of $10 to cash the check. This means employees are potentially paying over $560,000 in annual check cashing fees.

To make matters worse, many of these employees are hard working immigrants who regularly remit money to their home country at the same check cashing locations - often at a premium of 10% or more. Add on money order costs to pay monthly bills and we can see these costs add up very quickly.

A properly executed open network bank issued payroll card program is the solution for situations like these in many ways.

NACHA – The Electronic Payments Association indicates that companies stand to save $0.50 - $1.25 per payment by converting employees to direct deposit. Companies using direct deposit benefit from reduced fraud, easier bank reconcilement, reduced distribution expenses and the peace of mind that comes with knowing that it just works.

Since bank issued payroll cards accept standard direct deposit funding, Steven experienced similar cost savings for those employees who enrolled in the payroll card.

Additionally, both management and non management employee productivity was boosted because of reduced time spent distributing checks, replacing lost checks and a reduction in the number of employees leaving work to cash checks.

Open network payroll cards such as those issued by Prepaid Solutions USA, a service of West Suburban Bank carry FDIC insurance, and offer a host of employee friendly features typically available only to checking account holders such as bill payment, instant availability of funds on payday, purchasing power of the open network card brand (Visa, Mastercard, Discover), the ability to shop online, and the ability to remit funds abroad at low cost, just to name a few.

Employees also benefit by avoiding check cashing fees, money order fees, money transfer fees and by regaining the time it takes to accomplish all of those manual tasks.

For more information about open network prepaid cards for payroll, visit www.prepaidsolutions.com or call 630.652.2545.

Motivating factors.
Happy employees are motivated, and engaged employees directly impact the bottom line. A recent Northwestern University study indicates a direct positive link between engaged employees and increased corporate profitability and overall customer satisfaction, further indicating the importance of rewarding success. But managing effective and evolving reward programs is a challenge. Reward merchandise vendors often require minimum purchases and, if forecasts are wrong, a corporation can too easily end up with too few or too many branded BBQ grills in the warehouse.

Travel and merchandise have ruled the incentive and reward roost for a very long time. The first trade show associated with the motivation of employees was held over 80 years ago. Since then the sector has grown into a massive industry.

Still, indications are that the volume of corporate branded merchandise and travel is on the decline. Instead, The Incentive Federation now ranks gift cards as the most frequently utilized and most requested reward among surveyed corporations and employees. And when asked what kind of cards they value most, employees indicated that bank issued open network (Visa / Mastercard / Discover) spend anywhere cards are most preferred.

Open network prepaid card programs are easy to manage and audit, offer corporate branding opportunities for corporations and trophy value for recipients, utilize a just-in-time reward strategy with no pre-funded merchandise warehousing requirements (and no getting stuck with unfulfilled BBQ grills!) and most importantly, card programs motivate and deliver results.

Why are cards so effective? Incentive and reward cards offer a very high correlation between rewards and the actions required to earn them. Program participants complete desired program requirements and can see results nearly immediately.

From a brand loyalty and trophy perspective, cards and all supporting online and offline program can be fully branded. The program built around the delivery of cash to the cards can be straight forward or turned into an engaging game. Materials can be completely customized to enhance these missions. And where cards from merchants such as Home Depot, Macy’s or Sharper Image may confuse the message of where the reward is coming from, custom branded open network cards feature prominent placement of the issuing corporation’s brand.

Additionally, a wide variety of reporting tools are available to measure the metrics of reward programs and to understand broad trends behind the spending of reward dollars.

For more information about open network prepaid card programs for rewards and incentives, visit www.prepaidsolutions.com or call 630.652.2545.

The substance in auto-substantiation.
Flexible Spending Accounts and Health Savings Accounts are excellent employee benefits, but tracking and verifying eligible healthcare expenses is often a very time consuming, expensive and complicated task.

In recent years, management of FSA, HSA and other benefit related programs has been driven forward with the introduction of open network (Visa / MasterCard / Discover) prepaid employee benefit card products designed to be redeemable only at healthcare related merchants and service providers. Restriction of where the cards can be used is accomplished by completely blocking merchants that do not offer approved products and services.

While these products make the distribution of funds to employees easier, substantiating actual specific line item services and items purchased remains a challenge and the range of merchant categories where employees can use their benefits cards remains limited.

In October 2006, Visa USA announced that it will be the first card network organization to adopt a new list of product and service items developed by the Employee Benefits Institute of America Inc. (www.ebia.com) that qualify as eligible healthcare related expenses covered by FSA and HSA plans.

Under the new structure, participating merchants will integrate the list into their point of sale systems. Employees carrying participating Visa employee benefit cards will benefit from real time auto-substantiation of their qualified medical expense purchases.

Visa expects to implement the program with a wide variety of merchants including medical and dental offices, department stores, pharmacies, hospitals, grocery stores, and other locations where qualifying products and services are sold. As the system is adopted by these product and service providers, employees utilizing their Visa employee benefits card will be able to shop for their qualified items in a much wider variety of locations.

For employers and benefits management organizations this means reduced overhead and paperwork and increased employee participation. Employees will benefit from simplification of the entire process, increased convenience and reduced paperwork.

For more information about auto-substantiation and FSA and HSA card programs please call Prepaid Solutions USA at 630.652.2545.

Prepaid Solutions USA, a service of West Suburban Bank. Unlike any other bank.
There is a wide array of business solution providers in the prepaid card market - from single-person consulting firms to multinational financial institutions and everything in between.

A successful prepaid program engagement requires a committed partner with product, industry, regulatory and network expertise plus relevant successful execution experience and a strong vertically integrated value proposition.

And, it is best to work directly with a bank partner with principle memberships in the branded card networks.

Prepaid Solutions USA, a service of West Suburban Bank, a $1.8 billion employee owned financial institution located in the western suburbs of Chicago, is this kind of partner.

Uniquely positioned as an entrepreneurial consulting organization bolted onto a stable and profitable bank with a flat and nimble organizational structure, this is far from banking as usual.

With nearly 6 years as an open network prepaid card issuer, and a staff of regulatory, product and industry subject matter experts, implementation and project specialists and marketing professionals, Prepaid Solutions USA is well positioned to address and optimize a wide variety of human resource related payment situations.

Prepaid Solutions USA welcomes the opportunity to talk with you about your payment challenges.

For more information, please visit www.prepaidsolutions.com or call 630.652.2545 today.