Thursday, February 26, 2009

Postal rates rising again - online billpay use rises, too

More consumers are paying bills online today, and with postage rates about to climb again, those who are still mailing checks and money orders are going to take a second look at online bill pay.

For the average consumer who pays 12 creditors a month, the savings are significant:

12 $.44 stamps: $5.28
12 $.50* money orders: $6.00
Total: $11.28/month which total to $135.36/year
Add the cost of a box of envelopes: $20.00 ----------Annual billpay cost: $155.36/year

Cost of paying the bills online - ZERO

- if you have access to a bank account that will allow you to debit for your bills.

Those who do not qualify for bank accounts can open a Directo paycard account, if their employer offers direct deposit, or if they receive government benefits. Directo accounts are easy to use, and will save the accountholder hundreds of dollars a year - with online billpay, decreased fraud risk, and 24/7 access to their money.

If you're an employer, contact us to offer Directo paycards. It costs you nothing, and for your employees, the accounts could mean significant savings.

*money orders range in price according to the vendor and the dollar amount. $.50 is least expensive I found (Racetrac gas store). A postal money order from the post office for $1,000 was $1.50. Money orders must be purchases with cash - which adds risk of theft to the transaction -ed

Friday, February 20, 2009

Unemployment Debit Cards. Good intentions with pitfalls?

The Associated Press today released an article about some of the pitfalls of state governments's wonderful idea to implement debit card programs for recipients of state unemployment benefits. (see below):
AP IMPACT: Jobless hit with bank fees on benefits

Associated Press - February 20, 2009 12:43 AM ET
A new analysis shows many unemployed Americans are having to pay just to collect their own unemployment benefits -- or pay to call customer service to complain about it.

A review finds that 30 states have struck debit-card benefit deals with banks that include Citigroup, Bank of America, JP Morgan Chase and US Bancorp. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20.

A Democratic state lawmaker in Missouri has received a wave of complaints about the fees from autoworkers laid off from a suburban St. Louis Chrysler plant. She's urging a statewide review an eye toward reducing the fees.

With the national unemployment rate now at 7.6%, the market for bank-issued unemployment cards is booming.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Here is another example of the banking industry's attempt to bring a solution to states in order to lower costs of distributing payments. Did they accomplish this objective? Probably yes. But do they really care about the unemployed recipient? Aren't they really after the millions of unemployment cash deposits to stash in their banks for the state? You bet!

Along with the ability to earn intesest on the deposits - at low interest rates these days, how do banks make money? Afterall, one can only assume that the low bidder with the most influence won the business. The simple answer is fees, fees and more fees as illustrated in this article.

How do they maximize fees? Oops, someone forgort to look into the notion that banks are very territorial about who uses their ATM's for free? Not my customer? Thank you for that $1.50 - $3.00 per transaction. The other way to collect fees is the oldest banking trick in the book. Give 'em free checking and the case of unemployment cards, whammo hit 'em hard with NSF and Overdraft fees.

Is there another solution? Frankly the notion of issuing payments to debit cards like the unemployment dispersement and entitlement programs described above is a good one. Moving to electronic payment methods is more efficient, cost effective and less risky for states and the recipient. But for this Blog, states must negotiate the best deal AND read the fine print to so that the people who need the money most at these challenging times, their previously employed TAXPAYERS can maximize their cash benefits.

Directo offers a bank debit card program for recipients of unemployment and entitlement benefits. It's philosophy has been to fully discloses fees which are typically a fraction of the "free or low cost" bank programs. Directo also offers low cost banking solutions (pay card, or payroll card) for workers who cannot or chose to not use a traditional bank account to receive direct deposit of pay.

Monday, February 16, 2009

Positive Pay - Is it enough in these times? In the end, who gets hurt, really?

In these unprecedented times in banking, financial institutions now more than ever are reassessing relationships and in many instances, resetting the terms and lowering their risk with certain customers. In fact many financial institutions are demanding that certain customers change the way they do business.

Here's a scenario that the bank and company are trying to avoid; Outside a check casher, a fraudster waits for an innocent customer to arrive. The fraudster says, " Hey mister, there's a long line in there and you don't have all the time in the world. Let me cash this check for you. In fact, I won't charge you. I'll stay here and cash it with the rest of my checks." The innocent transaction takes place and the customer is on his way with cash in hand.

Meanwhile the fraudster takes the check, copies the check's microcoding with the company's bank and routing number. After a quick trip to the office supply store to purchase blank check stock, he then creates several other checks using the company's bank information. He hires a few people or in some cases, dozens of people to cash the fake checks all over town. He takes his 'profits' and hits another innocent person and company.

So who pays for this scam and the loss of thousands of dollars? If the checks clear through the banking system, the company typically ends up 'holding the bag' and absorbing the losses.

To curb this fradulant activity, banks offer a popular service called Positive Pay. From the Wikipedia definition of Cash Management "Positive pay is a service whereby the company electronically shares its check register of all written checks with the bank. The bank therefore will only pay checks listed in that register, with exactly the same specifications as listed in the register (amount, payee, serial number, etc.). This system dramatically reduces check fraud."

A bank's Cash Management Services organization is typically responsible for educating, selling and providing a Positive Pay solution to its customers. Once implemented many of the problems of check fraud disappear. But is the company totally out of the woods? What if this same fraudster hits again?

While it is true that fraudulent attempts may continue in some form, at least the bank and company are protected. With Positive Pay fraudulent checks are returned to the merchant. It's the grocer, check casher, liquor store or merchant that has decided to take the risk to cash the check. They then take the loss in this case. Somebody has to pay.

But there is more to the story, particularly for low income people. The 'unbanked' also takes the hit! Why? Because when the merchant cashes a fraudulent check from a company, the next man to attempt cashing a check may be turned away, or to make matters worse, paying an exorbitant amount just to get his hard earned paycheck cashed. Ultimately, who gets hurt, really?

And so while on the surface the company and bank have reduced their risk, what have they done to their workers, the individuals who are now paying more to get their checks cashed?

Companies must consider the ramifications of Positive Pay to the entire 'food chain' of payments. Some have looked to Directo paycards to help mitigate the risk and help their workers. Again, in the end, without a program like Directo, who gets hurt, really? Your workers, and you.


Friday, February 13, 2009

Employees using paycards to control spending

Employers who offer paycards are finding that even employees who have traditional accounts are taking them up on the paycard offer. Low cost paycards are increasingly used to split direct deposits into two "spending buckets," using each for a different purpose, such as one for paying down loans and credit card bills and one for day to day expenses, or even a holiday savings account.

Directo paycard programs cost employers nothing. You can support your employees' debt-reduction or savings efforts easily, while reducing payroll costs and fraud risk. Directo's fast implementation means you can be check free in two weeks. Find out more at

Tuesday, February 10, 2009

Is your Banker really your friend? It may be time to simplify with Directo

It occurs to me as more and more people are hurt by the economic downturn, their traditional 'brick and mortar', mainstream bank may not be your best friend. While the Congress and the Treasury are bailing out banks (who made too many bad decisions while cashing in big bonuses), who is helping you when you are trying your best to keep your financial head above water? Are mainstream banks looking out for you?

And what is the old adage? When you don't really need money, your bank would love to provide a new loan, mortgage or credit card? But when you are hurting financially, when you need the flexibility and financial assistance, the bank is all to happy to say NO to you and your loan application. Meanwhile to make up for losses, banks put their Overdraft and NSF program policies in high gear. Armed with sophisticated banking software, banks are ready and willing to pounce on your first mistake. This is not the time to be 'living on the edge' financially with your checkbook. One can easily run up $28 - $36 per occurance Overdraft and NSF fees when your checking account was short this month. Has this ever happened to you?

It may be time to consider simplifying your banking needs. Consider a low cost Directo 'checkless checking account' with its accompanying DirectoCash debit card. Rid yourself of high cost checks and the mounting associated fees. Get back in control with an account that doesn't care if your minimum balance is $10 or $0.10. Work with a company that understands there may be a better way to access your funds, without the customer 'no service' hassles of a big bank. Use the product to shop or take money at the ATM without NSF or Overdraft fees.

Is it time to simplify?

Unbanked? Need an account? Your local bank may not be able to help, according to the FDIC.

According to the American Banker, the FDIC released a study last Thursday that says 73% of banking institutions polled knew about “unreached populations” in their regions, but 70% did not think that extending services to them was a priority.

The study goes on to say that most banks offer basic financial education, but that’s it. Interestingly, only 14% of the 700 institutions surveyed said that they offered payroll cards through their business partners. Payroll cards offer benefits to both employers and their unbanked workers, cutting payroll costs while offering financial security for employees.

Directo’s paycard offers all of this and more, allowing unbanked workers freedom from check cashers as well as the safety of a bank account with funds held in an FDIC member bank. For banks that wish to expand their product offering to commercial clients, the Directo paycard program is an easy win which costs them nothing, is supported entirely by Directo, yet earns them goodwill from the community and CRA credit. - ed

FDIC Vice Chairman Martin Gruenberg is quoted in the article, saying “Many banks don’t actually have strategies in place to target and reach out to those populations effectively…a market opportunity that…in many cases isn’t being fully taken advantage of…” and that although accounts are available for the unbanked, they’re limited and don’t meet the needs of unbanked people, such as low fees, and being able to accept direct deposit of payroll.

It’s tough being unbanked in today’s harsh economic climate. With Directo, relief is just a paycard away. For banks and employers, the free program is just a phone call or email away. Contact Jim McCarthy at 770.810.6502 or email

Friday, February 6, 2009

Debit Card Skimmer

Recently I picked up a news video clip online from Yahoo News that illustrated how easy it was to steal debit card information using some slick technology. see video . The reporter does a great job reporting on the problem.

She also points to the problems with the recent hacking of RBS Worldpay's systems, whereby sophisticated scammers stole identification information and replicated customer's debit cards.

We all need to be careful about how and where we use our debit cards. The Directo paycard program instructions teach customers how to be careful. Our payroll card system processes and personnel protect customers at all time.

But you can never be too careful where you use any debit card.

- BH

Thursday, February 5, 2009

It's Severe Weather Awareness Week - Is your payroll protected? Directo paycards can help.

The U.S. has had a bad winter this year. The entire state of Kentucky was icebound at the beginning of Georgia's Severe Weather Awareness Week, and frightening long-term power blackouts still affect many. For Georgia, the week is preparation for tornado season, March to May.

As a business person, what do you do if if one of your branches or locations is caught in a weather emergency?

With a Directo paycard program in place, paying your employees is easy, even if they are displaced. Direct deposit allows you to send your payroll file electronically to your bank, whether you're in your office, at home, or in a hotel room miles away. Your employees are paid on schedule, and may withdraw their funds from any ATM and make PIN-based purchases anywhere in the country.

Don't wait for the weatherman's warning. Make Directo paycards part of your business continuity plan plan today. See more at