What to Expect of the Paycard Market in the Next 24 Months

Global Cash Card

Agenda

◆ Prepaid Overview◆ Post PC Era◆ Security◆ Education◆ Service◆ Support of Positive Financial Habits◆ Compliance◆ Value Added Features◆ Prepaid Overview◆ Payroll Card Case Study

1990s

Today

Activation and load services, balance return hit the market

1994

2001

2002

2003

20052007

Adoption andexpansion increasing

2009 FDIC Study

2010 Prepaid

regulation Dodd-Frank Wall StreetReform Act

2011

2012

$4T opportunity

Prepaid timeline

~$14.7B loaded onto 45M network-branded cards

10% of all households use reloadable prepaid cards

U.S. State agenciesadopt prepaid

2B transactions/ 110M cards

are issued globally Over 100,000 retail locations

Prepaid, the beginning

How is prepaid used today

• General purpose • Gift • Travel • Parents of youth/teens • Cross border remittance

Consumers• Payroll • Incentive/rebate/loyalty • Commercial spend • Employee benefits • Health: FSA, HRA, HSA • Insurance claims • Worker’s compensation

Businesses• Child support • Unemployment • Social Security • Tax refunds • Disaster relief

Governments

By the numbers: Paper checks

1. M. Fellowes, M. Mabanta. “Banking on Wealth: America’s New Retail Banking Infrastructure and Its Wealth-Building Potential.” Brooking Institution. 2008. http://www.brookings.edu/~/media/research/files/reports/2008//1/banking%20fellowes/01_banking_fellowes.pdf

2. “2010 Report on Check Casher and Basic Banking Fees.” Massachusetts Division of Banks. 2010. http://www.mass.gov/ocabr/docs/checkcashreport2010.pdf

Americans without bankaccounts pay

$8B Each year

At check cashing outlets, payday lenders and bill pay centers1

Employees pay up to

3%To cash their payroll checks with a check cashier2

Someone earning

$26Ka year would spend approximately…

$750in check-cashing and money order fees to pay their bills2

The Visa payroll card solution

Visa payroll cards enable companies to offer employees without bank accounts the

benefits of electronic payroll direct deposit◆ It is not a credit card – everyone

qualifies, and there is no creditcheck required

◆ Employees receive a prepaid,reloadable Visa card in place of a paper payroll check

◆ Employers can also reimburse employee expenses, pay bonuses, awards, and termination pay directly to the card

◆ Employees can use the card to make purchases and pay bills anywhere Visa debit cards are accepted. Employees can access cash at any Visa/Plus® ATM worldwide1

Note: 1. Provided that issuer participates in the Visa/Plus network

Benefits of paycard implementation

Increased direct deposit

Reduction in costs

Improved business process

Provides a solution for unbanked

Increased compliance

Employee satisfaction

Helps employees manage financies

Reduction in fraud 2

7

10

10

12

24

29

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Industry outreach

Resources

Available on Visa Online

◆ Payroll toolkit: Visa and Network Branded Prepaid Card Association (NBPCA) cobranded materials to help educate Employers and employees about the benefits of electronic pay.The toolkit includes the following:• Employee tip sheet: Overview of benefits, how to access wages and how to avoid fees,

whenever possible• Infographic: Illustration highlighting the cost savings of payroll cards over checks• Employer guide: Information on choosing and rolling out a payroll card program (available soon)

Available upon request:

◆ The Method of Wage Payment Guide: This guide provides an analysis of the current wage and hour laws within the 52 U.S. jurisdictions (50 U.S. states, Federal, and D.C.) and the requirements for each payment method

◆ Green and Yellow State Authorities Guide: An overview of the states that allow an employer to achieve 100% electronic disbursement of wages by offering direct deposit and payroll cards (e.g., no checks) and the legal basis for this "green"  or "yellow" categorization

◆ APA Visa Payroll Card Portal is a great resource from Visa and the American Payroll Association for specific state laws on electronic pay and for the latest information on compliance and regulations (link)

Staggering Mobile Adoption

◆ Mobile devices exceeded world's population in 2012.

◆ Fastest growing demographic• 18-24 year olds

◆ Tipping Points• Mobile traffic to exceed fixed by 2016

Smartphone

◆ What is a smartphone?

Smartphone: Game Changer

◆ Nearly half (46%) of U.S. adults use a Smartphone

◆ Usage tripled in 2011◆ Largest growth demographics• 18-24• Low Income

◆ Marks Post-PC Era

Top Mobile Os: North America

AppleAndroidOther

The Experience

◆ Rising Standard◆ Consumers driving the experience◆ Industry Catch-Up• “In the next 24 to 48 months, we see a

revolution occurring. The consumer is actually ahead of [the industry] and we feel it’s time to catch up.”

– Don Kingsborough, PayPal, Prepaid Expo USA in Las Vegas

Cards and Wallets

◆ Virtual Wallet• Passwords• $ Payment• Loyalty• Preferences and personal information

◆ NFC/RFID Technology◆ GPS/Locations Services◆ Mobile is a key piece of delivery strategies

including:• Embedded Prepayment• Loyalty options

GCC Mobile AdoptionTotal Cardholder Site Traffic

to Mobile TrafficOther 9500

Android 60878Apple Mobile

42000

All Traffic 658530

All TrafficApple MobileAndroidOther

Our Experience

◆ Mobile Cardholder• Check Balance• Initiate Transfers• Alerts• Text on Demand

Our Experience

◆ Administrators• Manage Employees• Load Pay

Security Considerations

Cardholder

PartnerEmployer

Shared Responsibility

Security Behavioral Analysis

◆ Intentionally “lost” smartphones in 50 cities

◆ 57% attempted to access “Saved Passwords” file

◆ 43% attempted to access banking app◆ 50% attempted to contact owner

- Symantec Study, 2012

Global Cash Card Security

◆ PCI Certified◆ Business Intelligence◆ Fraud Protection◆ Visa Zero Liability Policy ◆ FDIC insured balances◆ SSAE-16 Audited◆ Multi-Factor Authentication

Security Considerations

◆ Multi-Factor Authentication Now• What You Know• What You Have• How You Behave

◆ Future: Who You Are?

Security: Multi-Factor Authentication

◆ RSA Token & Mobile Device◆ Passwords, PINs, Personal information◆ Monitor & Due Diligence• Maintain Password strength• Change often• secure our devices with passcode• DON’T share

Future Security: Who You Are?

◆ Biometric Security◆ Fingerprint Readers• Integrated into Laptops

◆ Facial Scanning• Available on latest Android version• Available on jailbroken iPhones

Future Success

◆ Simple to Use◆ Trust in your partners and providers◆ Security◆ Acceptance

Access & Information

◆ Cardholders Require Real Time, On Demand Access to their Most Critical Information

• Information like balance, transaction history, and paystub content are most popular

• Access via live agent, IVR, text, phone, email, mobile to mobile, fax, & smart device delivery must be available

• As the mobile smart device/tablet market continues to evolve paycard providers must be proactive to engineer simple and easy integration processes

Education

◆ Paycard programs must have an excellent education program

• Education and variety of delivery methods ensures highest levels of paycard and direct deposit participation

• In the next 24 months only providers that have true dedicated field support and implementation teams will be able to proactively deliver the best results

Education

• The paycard provider must acclimate to the customer’s business culture and provide methods including but not limted to: onsite training, IVR, webinar, conference call, customer service orientation, DVD’s, and marketing materials customized to the customer’s specifications.

• Continuing education for the life of the program is mandatory.

Service

◆ Cardholders Want & Expect “World Class” Customer Service

• Must be free• Available 24x7x365• Contact Centers, regardless of industry, that

are outsourced especially abroad are not well received

• Measure the customer experience from start to end

Service

◆ The next 24 months present a great opportunity for providers to enhace their service to cardholders

• Develop their social media outlets• Broaden existing service by supporting

online chat & email response groups• You have to be available the way your

customers want you to be available

Support Positive Financial Habits

◆ Paycard providers that deliver free and minimal transactions have the highest retention and customer satisfaction

• This has to be fostered by strong education & implementation plans

• Paycard providers that outsource some or all of their key segments gamble on improper usage of the card to maximize revenue

• When cardholders feel “nickel and dimed” they are more likely to not utilize a paycard and make their frustrations known to their employer

Support Positive Financial Habits

• Supporting positive financial habits translates in delivering a paycard program that is truly an employee benefit

• Access to budgeting tools including but not limited to: savings calculators, online bill pay, and rewards are crucial

• Paycards are no longer for the unbanked and attract a variety of other target audiences. Feature rich programs with cost savings tools is the best model.

Where you can Mandate Paperless Pay

• Alabama• Arizona• Colorado• Delaware• Indiana• Kansas• Kentucky• Louisiana• Maine

• South Carolina • South Dakota • Tennessee • Texas • Washington • Wisconsin • Utah

*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards

• Massachusetts • Michigan • Mississippi • Missouri • Nebraska • North Dakota • North Carolina • Ohio • Oklahoma • Oregon ^

Where you can Mandate Paperless Pay

AK

HI

OH

WA

CAVA

MI

GA

KS

IA PA

WVDE

MS

ORSD

MO

WI

MN

KY

SC

FL

NC

UT

AZ

ND

NM OKTN

NE

WY

LA

IL IN

AR

VT

NY

CO

AL

MT

ID

NV

TX

MD

ME

NJ

DC

MARI

CT

NH

*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards

State Regulations in “Yellow” States

◆ Florida – Choice of paycard or direct deposit can be a condition of hire for employees hired after July 1, 2009. However, already employed individuals receiving checks cannot be terminated for refusing to be paid electronically.

◆ Iowa – Employees hired after July 1, 2005 may be given the option of being paid on a paycard or by direct deposit.

◆ Virginia – Employees hired after January 1, 2010 may be given the option of being paid on a payroll card or by direct deposit.

“Green” states permit Paperless Pay

“Yellow” states with restrictive Paperless Pay

“White” states require voluntary participation

AK

HI

OH

WA

CAVA

MI

GA

KS

IA PA

WVDE

MS

ORSD

MO

WI

MN

KY

SC

FL

NC

UT

AZ

ND

NM OKTN

NE

WY

LA

IL IN

AR

VT

NY

CO

AL

MT

ID

NV

TX

MD

ME

NJ

DC

MARI

CT

NH

*The laws or enforcement positions in the “Green” states can be interpreted as allowing paperless pay through direct deposit and payroll cards

What Your Employees Can Save With Global Cash Card

Payroll Cards are more cost-effective for consumers than other payment methods, including checking account, some prepaid GPR cards and cash-based options.

Payroll CardsGPR CardsCheck Cashing/Money OrderBasic Checking Account

*Results based on a study conducted in August 2011 by Bretton Woods, a management advisory firm specializing in financial institutions. Source: Paybefore.com.

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Payroll Card Case Study

◆ What’s in it for the unbanked EE?

• Convenience factors• Company obligation to minimize payroll

distribution risks (uncontrollable acts)• Purchasing power via a branded card• Promote at least 5 ways of accessing

their pay without paying a dime

39

Payroll Card Case Study

• Average Age

• Average Tenure

• Male Percentage

• Female Percentage

• Full-Time Percentage

• On-Call Percentage

• Part-Time Percentage

• Hourly Percentage

• Salary Percentage

• Ethnicity Percentages ➢White ➢Hispanic/Latino ➢African American ➢Asian ➢American Indian ➢2 or More Races

◆Unbanked EE Demographic Study

Paperless Payroll Performance Metrics

KEY PERFORMANCE INDICATORS

◆ Cost per Paycheck

◆ Cost per Off-Cycle Check

◆ Cost per Unclaimed Paycheck

◆ Cost of Overnight Delivery Expense

◆ Cost of Stop Payments

◆ Paperless Pay Distribution Rate

◆ Electronic Payroll Participation Rate

STRATEGIC EXECUTION FOCUS

Finance Customer People

Key Performance IndicatorsProcesses

Critical Success Factors

Corporate Objectives

Strategic Vision

Why Change Initiatives Fail by John Kotter, Leading Change

Change Not Grounded In Corporate Culture

Under Communicating The Vision

Lack Of A Vision

Not Removing Obstacles To The Vision

No Powerful Guiding Coalition

No Systematic Plans For Early Wins

Lack Of Urgency

Declaring Victory Too Soon

Readiness Drivers Definition Question it looks to answer

Self-Efficacy

Confidence in individual and group's ability to make change succeed

Can we do this? Will this work?

Principal Support Key organizational leaders support this particular change

Do organizational leaders believe in this change?

Need for Change A gap between the current state and ideal state

Why a change?

Appropriate of the Change

The correct reaction to fix the identified gap Why this change?

Personal ValenceClarifies the intrinsic and extrinsic benefits of the change

What's in it for me?

Understanding of the Change

Informs the individual of the specific change requirement. What is the change?

Modified table from (Bernerth, 2004, p. 41)

Readiness for Change Factors

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Payroll Card Case Study

◆ Behavioral Change Initiatives

• Implement pay selection enrollment form• Consider charging EEs for stop payments• Where applicable, mail all paper paychecks• If checks can’t be mailed, consider changing

pick-up time for payroll check distribution• Consider one-time conversion incentive

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Payroll Card Case Study

◆ Keys to Employee Adoption • Promote savings account component• Family Member cards• Competitive fee schedule • Allow multiple EFT accounts• Partner with ambassadors• Utilize instant issue and signature paycards • Make the process simple and easy (ESS)• Consider other incentives – just ask

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Payroll Card Case Study

◆ Marketing efforts – next steps• Employee PAYcard signage• Employee communication plan x 3• Frequently Asked Questions doc• Provide locations of surcharge-free ATMs in

and around business vicinity • Consider random drawings for loaded

PAYcards ($50, $100, $500 increments)• Post-implementation metric reporting – Did

you get the expected results from the initial phase I rollout?

46

Payroll Card Case Study

◆ Proven Results

• Over 3,000 PAYcards • 96% Electronic Payroll Participation • PAYcards used for CA term wage payments• Eliminated state mandated waiting time

penalties• 95% Print Suppression Rate for ePayroll • Significant component to BCP strategy• Lean Practice for Elimination of Waste

Next Steps – Plan to Win

◆ Create a vision◆ Identify pain points◆ Communicate Strategy◆ Prepare for Change◆ Pilot Solution◆ Implement Rollout◆ Measure for Results◆ Sustain Momentum

If You Don’t Know where you’re going, any road will take you there…..

Questions

Contact◆ For more information please contact:

George Mavrantzas

Global Cash Card

Director of Special Projects

Phone:  888-220-4477 ext. 305

E-mail:  gmavrantzas@globalcashcard.com

 

Website: 

 www.globalcashcard.com

Global Cash Card