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Rise in Prepaid Card Usage Offers Opportunity to Employers

OpportunityFor many consumers, paying with plastic no longer means using a credit or debit card. According to a new report from the Pew Charitable Trusts, the amount of money loaded onto reloadable prepaid cards has more than doubled in the past three years. In 2012 alone, Americans added $65 billion to their prepaid cards.

Five percent of American adults – or 12 million people – now use a prepaid card at least once a month. In many cases, consumers are using them in addition to another financial product, like a checking account. They’re turning to the card to help them take control over their finances, rein in spending and avoid debt from credit cards or overdraft fees. In addition to these findings, the report revealed:

  • Forty-one percent of prepaid card users have closed or lost a checking account because of overdraft fees.
  • Sixty-six percent of prepaid card users want a feature that allows them to keep some of the card’s balance in savings.
  • Large majority of prepaid card users oppose adding features that let them overspend their card balance, such as credit or overdraft capabilities, viewing them as self-defeating. 

For employers looking to implement all-electronic payroll, these kinds of cards offer an attractive alternative to employees who don’t want or can’t receive direct deposit for their wages.  And with usage on the rise, the time may be right for companies to evaluate whether the paycard option makes sense for their employees.

Has your company adopted paycards as a payroll disbursement option? How have you seen usage change over the past few years?

Learn more about working with ADP on electronic payment solutions that can help your employees reap the benefits of paycards.
 

 



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