The newest player in the growing payroll card marketplace is Springbok Services Inc. The Engle-wood, Colo.-based company launched enPay, a Visa Inc.-branded prepaid card. Springbok, which services the business community, not consumers, is offering the card to its roster of over 6,000 companies.
"A lot of our strategy right now is actually going after our current clients," said John Nail, Compensation Product Manager at Springbok.
"We service over 200 of the Fortune 500 businesses today. But we also work with small and medium-sized clients as well that also have this need and have a lot of unbanked or even credit challenged employees.
"So we're basically working toward providing a value-added service to all those existing clients, as well as any of our marketing partners that have clients out there that have this need."
The main need payroll cards address is the overhead costs of businesses issuing paper checks to employees. Typically, employers pay $2 per paper check per pay period, Nail said. That adds up to $50 per employee per year - a cost that electronic payroll eliminates, he added.
According to Nail, the enPay solution is easy for employers to set up without their having to change existing processes; employers only need to have direct deposit for employees with bank accounts to take advantage of enPay for workers without bank accounts. Springbok can integrate a program in seven to 10 days, he said.
From the employees' perspective, payroll cards offer savings, convenience and safety. Nail said unbanked employees are charged up to 5 or 6 percent of the face value of checks to have them cashed at check cashing businesses. For a $300 check, "that's about $15 per pay check just to get their funds," he said. "So it can be close to $500 to $600 a year that they're paying just in these fees."
Although a large percentage of employers have adopted direct deposit, that still leaves out their unbanked employees from participating in electronic payroll, Nail said. He cited statistics that state consumers spend over $1.5 billion annually in check cashing fees. "So there is a large population out there that can really benefit from this card product," he said.
While eliminating that cost, the enPay card offers:
Springbok Bill Pay is a "pay anyone model," Nail said. "You can not only electronically pay billers, but we can also send out checks to those billers. It's very easy to use. Very similar to a bank's bill pay model. So you can add payers that you want. You can do recurring payment. So [you have] all of this functionality that we are able to provide these cardholders that they would typically be able to get at a bank."
Springbok calls itself the "only end-to-end prepaid MasterCard and Visa solutions provider." It functions as program manager, processor, card producer and shipper.
"We do all that in-house," Nail said. For example, as program manager, Springbok works "directly with the banks to make sure that the card program is compliant and that everything is done satisfactorily," he added.
Typically, companies will keep some functions in-house and outsource others. But Nail illustrated the benefit of keeping all the functions under one roof.
Questions can be answered and problems solved quickly because the person with the answer might be right down the hall.
"The same thing with employers," he said. "They may need a rush card, and they have to have it the next day, no questions. We can go to fulfillment and get the card rushed, then out. A lot of times if you're working through a vendor, it's not quite that easy to do."
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