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/

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):
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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.
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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.
BH