Privacy and Direct Deposit

By now, most companies are aware that a direct deposit program can cut their payroll costs significantly. It's tough to convince some employees to participate. Rumors abound about how evil companies can siphon cash out of the unwary employee's account, causing some to hold tight to their paycheck-cashing ways. Others love to receive their paycheck out of long habit, or as one worker told us, because he felt that his hard work was validated when his supervisor looked him in the eye and handed over the paycheck. He soon felt just as validated when his bank account received a deposit on payday, and he didn't have to visit the bank on his thirty minute lunch break.

It surprises some in the payroll and HR departments when a direct deposit mandate suddenly reduces paychecks by as much as seventy-five percent, all from employees who had bank accounts but weren't willing to participate in direct deposit. Directo paycards can fill in the gap for the remaining workers who cannot get a bank account due to bad credit and other reasons. Many times, employees with privacy concerns opt to open a Directo account to receive their direct deposit pay, even if they already have an account with another bank. Directo never checks credit, and statements are online, so there's never correspondence with the account number in the employee's mailbox.

If you want to increase direct deposit participation, a Directo paycard program will make an immediate, successful impact on your bottom line!

Facts are showing prepaid cards and payroll cards are better for some

A recent study by Lightspeed Research as illustrated in a whitepaper by Aite Group LLC, further supports the notion that Prepaid Cards and paycards or more commonly referred to as payroll cards, are in fact a better product than traditional checking accounts for 14% of the banked population.



This is a real threat to banks who arguably may be providing the wrong product for their low end customers. Or perhaps they are providing the right product at too high a price. Banks must find a way to profit from each 'strata' of customer that they serve. The article suggests that Banks and financial institutions can actually win in this category by partnering with companies that are successful, marketing in this markeplace.



For 10 years, Directo Inc. of Atlanta has been 'carving out a niche' in providing payroll cards and prepaid cards to the unbanked and low wage earner. Helping over 250,000 with basic banking needs, Directo is growing its business by helping over 70 banks, assist their customers or workers of corporate customers in this arena. for more information see http://www.directocard.com/.



Aite Group LLC is a leading and relevant research and consulting firm serving the financial services arena.

Cash Advance Loans vs Saving for Emergencies --- a no-brainer

Your employees may be using short term loans to make ends meet. This two minute informative video from bankrate.com shows the pitfalls, and offers alternatives:

http://www.bankrate.com/dls/news/chk/video-check-cashing-service-a1.asp

Your workers can open a second Directo payroll card account for savings and emergency funds, painlessly saving through direct deposit. To find out more, or to start a Directo program at your business at no cost to you, email Jim McCarthy today at jmccarthy@directo.net!

Make sure to check that receipt!

As more people use debit cards (such as the Directocash paycard) for small purchases, more merchant errors are bound to happen. South Carolina resident Guadalupe Pequino's story isn't typical, but it's a reminder to glance at your receipt to make sure it matches your total purchase price. Ms. Pequino bought $8.64 at a local Burger King with her Bank ofAmerica Visa Check Card. The cashier keyed the amount in twice, resulting in a $8.648.54 total. The WDSU report went on to say that the amount was debited from her account, and that it took 5 days for her balance (minus the $8.64, we suppose) to be returned to her account. During those five days she couldn't pay her rent, make her car payment, or even buy food, according to a friend of Ms. Pequino.

What the article did not explain was that in these cases the merchant has to settle the claim. If she reported the mistake on Thursday afternoon, and the Burger King issued a credit the next day, Friday, then the money could not have been in her account any sooner than Tuesday, because it takes two days for it to settle, and transactions don't settle on Saturdays and Sundays.

Check your receipts in the store, folks, while mistakes can be easily reversed.

Need to reduce debt? Directo's paycard can help.

Directo payroll cards can be an important tool for reducing debt. By signing up for direct deposit, money is in the bank on payday, rather than cashed, removing the temptation for unplanned spending. Billpay can be done automatically, saving money and time.

For those working on debt reduction using a plan such as the Dave Ramsey program, the paycard account will prove valuable as credit card or loan's monthly balance shrink, the minimum paid along with the extra amount gained from the snowball.

If you or your employees already have bank accounts, consider opening a low cost, secure Directo paycard account to manage your money as you go through the debt reduction program. From stashing $1000 away for emergencies to paying down creditors, Directo will be there every step of the way, ready to answer questions and provide help. Your money is safe with us, and now you can watch it grow. Learn more at www.directocard.com.

More free ATMs in the UK, but what about the US?

The March 5th issue of ATM & Debit News reports that UK-based Bank Machine, Ltd. is going to double the number of surcharge-free ATMs that they offer. They operate 2,000 surcharging ATMs and 250 free ones. The 250 additional ATMs will be added in low-income areas to fill the banking gap left by banks that have abandoned less lucrative locations. ATMs located in stores may be partially subsidized by rent from retailers, on the assumption that the machine will draw traffic.

This is an idea that needs to spread to the United States. The UK machines are typically installed in "hospitals, universities and military bases." ATM users will have the safety of accessing their money in a safe location, while the ATM owner is shielded from the vulnerability of a street-side machine.

Bank Machine Ltd. is owned by Houston-based Cardtronics.

Sometimes banks aren't what folks want

The article below from the American Banker warrants reviewing. Those groups or institutions that are serving the low income and unbanked commuities must recognize that there are very good alternatives and better mousetraps to serve this expanding market.

Viewpoint: Don't Overlook the Role that Nonbanks Play

By Joseph Coleman, American Banker Friday, March 6, 2009

Why is the Federal Deposit Insurance Corp. determined to recreate the wheel when it comes to serving the financial needs of low- and moderate-income consumers?

The FDIC's Advisory Committee on Economic Inclusion's most recent meeting highlights many of the challenges and shortcomings associated with the ongoing efforts to convince millions of Americans that they are better served by using banks and other mainstream financial institutions than alternative providers.

The financial service center industry, with 13,000 locations nationwide, conducts more than 350 million transactions each year. These companies are regulated by a variety of federal and state laws. The transaction-based model for accessing day-to-day financial services is well established and functioning efficiently on a cost-effective basis.

Perhaps more importantly, millions of people use these alternative providers, not because they have to, but because they chose to. Stores are located in neighborhoods, keep convenient hours (up to 24 hours a day, seven days a week), have friendly employees who speak the customer's language and offer a wide array of services.

Through new technologies, many stores that belong to my organization, the Financial Service Centers of America, have expanded those opportunities to include "virtual bank accounts" that offer FDIC-insured savings options with a 5% interest rate tied to a prepaid debit card.

A national customer satisfaction survey confirmed the popularity of financial service center. It found that 92% of respondents rated the overall value of products and services received at centers from "excellent" to "good" for the money. In addition, 95% of respondents rated the overall quality of services from "excellent" to "good."

Two recently published reports by Aite Group ("Debunking the Myths About the Unbanked and Underbanked") and the FDIC ("Banks' Efforts to Serve the Unbanked and Underbanked") highlight common misconceptions about this market segment and the shortcomings of banks to adequately serve it. For example, Aite Group said its study "reveals that people are unbanked for very practical reasons, including credit, pricing, cash flow and service issues." The FDIC study found that more than 70% of respondents "have not identified" expanding services to the underbanked as a priority.

The Advisory Committee on Economic Inclusion is exploring the value of expanding government incentives to help banks serve the underbanked.

What is most perplexing is that even with the financial service center industry's solid record of service to this market segment and the inadequate performance of banks, the FDIC has repeatedly rebuffed my group's efforts to participate in the committee.

One area where we could be of particular assistance is with small-dollar loans. Financial service centers handle about $13.2 billion of these loans each year. The FDIC itself has acknowledged the need for such a product by implementing its Small Dollar Loan Pilot Project.
It is important for policymakers and those who advise them to have solid answers to the following questions:

-What are the standards for judging the success of the FDIC's pilot program?
-Can the bank model for small-dollar loans be economically translated to the current volume nationwide?
-What levels of loan losses are being reported by participating banks?
-Are banks' pilot programs profitable, sustainable and scalable?
-Is the FDIC granting banks relief from existing loan-loss reserves for this product? (Subprime loans require a 25% capital reserve.)
-A core question to consider: Is it better for consumers to have access to banking services or access to banks?

The FDIC should work to create a collaborative, inclusive environment where banks and financial service centers can work together to provide the services customers want and expect.
Coleman is the chairman of the Financial Service Centers of America.
© 2009 American Banker and SourceMedia, Inc.

Directo provides an alternative to this market at the worksite. Payroll Cards. www.directocard.com

Direct Deposit/Banking Service for Spanish Speakers

By Ferney Colorado & Melissa Burkhart

Many employers and HR managers have long noted with great frustration that their Spanish-speaking employees tend to be very reluctant to sign up for direct deposit of their paychecks. The advantages to an employer of having at least the majority of their staff on a direct-deposit system are considerable---greatly reduced costs for paper products, improved efficiency in payroll departments, greatly reduced chaos on payday, etc.

While these are very significant issues to many companies, the growing risk of check fraud makes it yet much more urgent for companies to find a direct deposit program that will meet the needs of all employees. Unfortunately, check fraud is relatively easy to commit, especially when employees cash their checks at smaller venues, like check-cashing operations or liquor stores. A common practice is for several people to present forged payroll checks at a local bank and attempt to get them cashed. It is easy enough to make forged copies of a legitimate paycheck and them and then modify only so that they will correspond with false identification.

Because of the volume of transactions that banks and check-cashing outlets process daily, as well the limited resources available for training bank personnel to recognize the latest fraud techniques, preventing this crime can be extremely difficult. Therefore, a growing number of banks make the effort to protect themselves from payroll check fraud by making it difficult or expensive for the individual to cash checks. This practice obliges ‘unbanked’ workers to cash checks at ‘fringe’ financial services outlets, liquor stores and the like---which can expose employers to increased risk that the fraud will occur in the first place.

For company management, it is very easy to see that a direct deposit program that serves and meets the needs of immigrant or transient workers is the ideal solution. Fortunately, Directo, an Atlanta-based company, has introduced a low-risk direct deposit program that is customized specifically for unbankable workers. Furthermore, Directo has gone to great lengths to bring foreign workers on board with this concept. Directo is aware that workers from Latin America in particular have a great mistrust of financial institutions and a strong preference for saving and spending money in cash. This is a result in part of economic instability in many Latin American countries. Spanish speakers will be very reluctant to trust a paper statement telling them their account balance and would far prefer to determine their own balance by counting bills in their hand. Often this mistrust is so strong that even those Spanish speakers who are eligible for a bank account will choose not to have one.

To assuage these doubts, Directo starts by providing literature, training, and customer service in Spanish. They also consult with Futuro Sólido USA http://www.futurosolidousa.com/ as to the best communication strategies for laying to rest Spanish speakers’ typical fears and misconceptions. With such a clear, concrete, multi-step, roll-out process, both companies and their employees are very happy to find that they can achieve significant savings and greatly enhanced security with Directo’s program.

The advantages of Directo---for both business owners and employees speak for themselves. Some of them are:

For Business Owners

Eliminates the risk of exposing the company corporate account number in environments where it might be vulnerable, such as check cashing outlets, which gain access to the bank account number.
Eliminates the risk of overdrafts because the company controls when the payments will be distributed
Eliminates the all-too-frequent chaos on payday, when employees often attempt to end a work day early, crowd into the office to receive their checks, and rush to the check-cashing establishment before it closes
Increases the company’s efficiency by eliminating lost checks or paper check production and administration.

For Employees
Greatly reduces the risk of loss from theft since many unbanked workers carry large amounts of cash on their person and accumulate their savings in cash at home
Eliminates the cost, as well as the time, associated with cashing checks
Increases access to the privileges, safety, security, convenience and other benefits enjoyed by banked workers
Greatly reduces the cost of sending money to family members in their country of origin, as Directo cards are used internationally at ATM's and this transaction is offered for a very modest flat fee---rather than a percentage of the amount being transferred

Furthermore, by sending money to their home countries by traditional means, immigrant workers also face potential fraud themselves that their employers are entirely unaware of. Many express concern that the personnel at the establishment where their wives or mothers are to pick up their cash will not be able to resist the temptation to pocket a bit of it. Once enrolled in this service, these workers enjoy the automated system that guarantees that the family they are supporting in their home country will receive exactly the right amount of money, according to the most current exchange rate.

Programs like Directo enhance a company’s benefit package at no cost whatsoever to the employer. Furthermore, when a company provides a system that so clearly has been customized to meet the specific needs of immigrant workers, those workers sit up and take notice. Their impression (although usually incorrect) of benefits in general is that these packages are not designed to meet their needs---but rather the needs only of the company and of those employees who were born and raised in this country. A service like this will go a long way towards demonstrating to them that this is not at all the case.

Ferney Colorado and Melissa Burkhart are dedicated to provide understanding and value of benefits programs for Spanish speaking workers. For more see http://www.futurosolidousa.com/.

Directo is a leading provider of payroll cards for the unbanked worker. Founded on the notion that there is a better way for Spanish speakers to receive and keep their hard earned pay, Directo celebrated its 10 year annivesary in November of 2008. http://www.directocard.com/

Make a Referral - jump start the economy

I'm pledging to make a referral to a business I want to help as part of a national campaign to make 1000 referrals March 9-13. What a great small business stimulus plan.

View >>