Tuesday, October 5, 2010
A September 2010 report from Aite Group entitled Prepaid Debit and Payroll Cards: Winning in the Void said that "the prepaid debit and payroll card industry is destined for unprecedented growth, filling a void at the bottom of the consumer financial services market."
According to Aite, that void was created by multiple factors over the past few years, including the housing market bust, the financial crisis and economic downturn, the surge in unemployment, and large numbers of consumers defaulting on debts. The cumulative effect of these factors is that mainstream financial institutions no longer service customers on the "low end of the market," Aite said.
As a substitute, "prepaid debit and payroll cards represent a compelling alternative to consumers shut out of checking accounts and credit cards," Aite added.
Additionally, the American Payroll Association conducted its annual employee survey, Getting Paid in America, and concluded that 68 percent of employees are "OK" with electronic payroll. Ninety-six percent of survey respondents were paid by direct deposit or paycards, the APA found; only 4 percent still received their pay by paper check.
The APA quoted Laura Kelly, Group Executive, Global Prepaid & Debit Product Solutions, MasterCard Worldwide, as saying, "Prepaid payroll cards are an efficient payment tool that streamline the payroll process, increase operational efficiency and reduce payroll costs for employers, while also providing employees with greater security, convenience and control over their paychecks."
More than 31,000 employees responded to the survey, the APA said.
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