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Prepaid Paves the Way for Payroll

By: Victoria Conroy
Published: September 2010

Prepaid Paves the Way for PayrollWith a sizeable number of the world's population still unbanked, there are millions of employees and workers around the world who still receive their salaries in cash or cheques, leading to huge administrative burdens for employers and banks, and inconvenience for the employee, along with the added cost of accessing their salaries.

This report examines the factors that have elevated prepaid solutions as the ideal solution in the payroll sector, how the costs of such solutions compare with other methods used by unbanked or underbanked customers, and how prepaid solutions can lead to lower costs and deliver greater efficiency and benefits to all stakeholders.

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For the uninitiated, or those unfamiliar with prepaid, the first part of this report is an introduction to what prepaid cards consist of and their general functional characteristics.

Part One looks at the background and the challenges of paying workers using paper-based methods, and a comparison of the costs that unbanked workers incur using traditional methods.

Part Two looks at the various benefits of prepaid payroll solutions, and how they can benefit employers, employees and issuing partners, along with the levels of market awareness of such solutions.

Part Three is an overview of the market size for prepaid payroll solutions in various parts of the world, giving an idea of the potential and scope for these solutions.

Part Four consists of case studies, where prepaid payroll solutions have been successfully implemented by various entities around the world.

Read this report to:

Gain a complete overview and background of prepaid cards
Understand the benefits of prepaid payroll solutions
Learn how these benefits apply to employees, employers and issuing partners individually
Have an overview of the market size, and find out where the opportunities and threats lie.

About the author:

Victoria Conroy is a financial journalist specialising in the fields of payment cards and electronic payments. Previously editor of the market-leading payment card industry publication Cards International, published by VRL Financial News, she has also authored ‘Debit Cards as Profit Drivers’, and has spoken at many payment-related events and conferences around the world.

Prepaid solutions represent one of the most innovative propositions in the payment industry due to their inherent flexibility, convenience and applications across a broad range of industry sectors. It's no wonder that banks, payment networks and programme managers have devoted such significant resources and investment into promoting heir usage, but each industry vertical requires different business models as end-user groups have different needs, and a one-size-fits-all approach will quickly doom some programmes to failure.

The costs and challenges of wages and salary cheques

Providing banking services to unbanked and underbanked employees has long been fraught with fundamental contradictions. On one hand, in the more mature banking markets, this has represented the last major consumer segment promising worthwhile volumes of new accounts. On the other hand, the relatively low balances - typically a function of lower earnings - have made it difficult for banks to operate such accounts profitably.

Unbanked consumers tend to use cheque cashiers, payday loan outfits and similar outlets to gain access to their wages in the form of cash. The fees associated with these methods demonstrate why prepaid payroll solutions are an attractive alternative.

Benefits to end users and banks

Cost control and streamlining is important for both small businesses and large corporations. Prepaid is now proving itself as a valuable companion for managers seeking to remove inefficient, non-electronic payment methods like cash and cheques, while improving overall operational efficiency.

Despite the ongoing trend of paper-based payments giving way to electronic payments, the need for companies and other organisations to issue payroll cheques is set to continue unabated. Automated payroll payments using electronic funds transfer are only available where employees have a receiving account with a financial services institution. The prepaid payroll card provides employers with another option for automating their back-office operations. All forms of remuneration and expense reimbursement can be channelled through the payroll card service.

The market opportunity

There have been various studies done to examine the market opportunity for prepaid payroll cards worldwide, and this section of the report outlines the various statistics and market size estimates to gain a better understanding of  the market opportunity.

Case studies

US company lowers payroll costs and achieves 75% e-pay.

Advanced Payment Solutions and Krown Recruitment

Global Cash Card and Uno Restaurants in the US

JP Morgan  and Kelly Services 

Executive Summary


What is a prepaid card

The structure of payroll cards

How banks earn money from payroll card fees

The payment network offerings


1 The Costs and Challenges of Wages and Salary Cheques

The scale of the unbanked problem

The cost to the unbanked employee

Tailored pricing is key for success

Types of fees

Pricing comparisons



2 Benefits to End Users and Banks

Multiple commercial benefits

Benefits for the employer

Benefits for the employee

Identifying the opportunities

Identifying the challenges

Payroll prospects in Europe

Awareness of prepaid payroll solutions


3 The Market Opportunity

The US


Awareness of the prepaid concept

Reloading and fees

The UK example

Scope for growth

Changes to the UK prepaid landscape

The Italian example


4 Case studies

US company lowers payroll costs and achieves 75% e-pay

The company profile

The situation

The solution

Keys to success

Programme implementation

Training and Pay Choice Presentation


Key benefits

Programme results

Future plans

Advanced Payment Solutions and Krown Recruitment

The opportunity

The solution

The results

Global Cash Card and Uno Restaurants in the US

JP Morgan and Kelly Services


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