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NETSPEND COMMERCIAL PREPAIDPaycards – You will learn what to look for and what to avoid regarding payroll cards leavingthe session with a developed paycard strategy complying with legislation in all 50 States.RMRPC – 10.17.2019

Today’s Agenda Jeff’s background and Netspend Understand the history of electronic payroll distribution, what to avoid andthe potential benefits payroll cards can bring to your business and to youremployees. Visa – An Employer’s Guide to Payroll Cards Employer and employee benefits Understand your responsibility and the different responsibilities of issuers,employers, program managers and employees, the different Federal andState Laws you need to comply with and how 100% electronic pay is possible. Understand if Real Time Funding and Earned Wages make sense for yourbusiness. Develop a paycard strategy that complies with legislation in all 50 States. Q&A session2

Who is Jeff?Speaker BioJeff Albert from Netspend (a Platinum Sponsor of APA), joins us today fromIrvine, California. Jeff is a published author and has been viewed as anindustry expert on electronic payroll distribution for over 8 years. Jeff’spassions include family, traveling and writing. In business, Jeff is a firmbeliever that companies can offer an electronic payroll experience thatemployees love and depend on - that is simple to use, reduces costs andcomplies with strict regulations in all 50 states.3

Who is Netspend?Netspend is the Leading Provider of Consumer & CommercialPrepaid ProgramsCore ProductsKey Metrics* Commercial Prepaid Card Programs Payroll, Award, Tips-to-Cards, ExpenseManagement 5M active cardholdersConsumer Prepaid Cards Retail Bank GPR (Turndown, Underserved,Unprofitable DDA) Over 110,000 distributing employersand locations Value Added Services Online Wage Statements, Electronic W2’sand 1095-Cs 3M direct deposit active cardaccounts Over 130,000 reload locations 28.7B Gross Dollar Volume Partner with multiple Nationally andStateChartered Banks*December 31, 2016; June 30, 20174

A Few of Our Commercial Prepaid Partners5

A high-level history of electronic payrolldistributionRegulationsHow pay has evolved to stay relevant to themodern worker6

Paycard Pitfall Headlines- When Guidelines are not Followed7

What Happened Commonwealth of Pennsylvania – McDonald’s franchisee sued in 2013 by 2,380 employees for paying them by paycard. The trial court denied the franchisee’s request for summary judgement but cleared it for immediate appeal The Question? - Are payroll cards the equivalent of payment of wages by “lawful money of the USA or check”? Court ruled payroll cards by themselves are not money or a check and not permitted under Pennsylvania’sWage Payment and Collection Law (WPCL; 42 PA. C.S. §260) as the Exclusive option to receive pay. Fast forward to today - The issue before the court is whether the payment of wages using a payroll card constitutespayment in “lawful money of the United States or check” Regulators and Special Interest Groups publicize “Recommended Practices” and “Guidelines” Electronic Payroll Solution vs Paycards Recommendations track with Netspend's practices used since day 1 The investigations and recommended practices are a good thing - Providers must Do More and Bring More Value Electronic Pay is easy and compliant when Right program is used Properly8

Our Current Landscape Continued New Hampshire & Massachusetts Legislature CFPB effective date – April 2019–APA, through its Government Relations Task Force Subcommittee onPayroll Paycards, help shape the development of the rule. In 2015,APA express concert to CFPB that the Prepaid Rule would: (1) fail to provide employees with crucial program information (2) discourage employees from using payroll paycards (3) place burdensome requirements on payroll card issuers that may impact the quality of theirprograms NY regulations remain revoked – NY releases templatesfor direct deposit and payroll cards. Colorado Senate Bill 08-120 still effective from 8-6-2008–8-4-102. Proper payment - record of wages. (2.5) (a) NOTHING IN THISARTICLE SHALL PROHIBIT AN EMPLOYER FROM DEPOSITING ANEMPLOYEE'S WAGES ON A PAYCARD, SO LONG AS THE EMPLOYEE: (I) IS PROVIDED FREE MEANS OF ACCESS TO THE ENTIRE AMOUNT OF NET PAY AT LEASTONCE PER PAY PERIOD; OR (II) MAY CHOOSE TO USE OTHER MEANS FOR PAYMENT OF WAGES AS AUTHORIZED INSUBSECTIONS (1) AND (2) OF THIS SECTION. (b) AS USED IN THIS SECTION, "PAYCARD"MEANS AN ACCESS DEVICE THAT AN EMPLOYEE USES TO RECEIVE HIS OR HER PAYROLLFUNDS FROM HIS OR HER EMPLOYER9

Understanding Visa’s GuideVisa’s Employer’s Guide to Payroll CardsAn important part of your role as an employer is to ensure that you pay yourworkers promptly and accurately, and that you comply with the federal and statepayroll laws that apply to your business. As an employer and a payroll businessperson, you want to manage your payroll system in the most efficient, costeffective and equitable way possible. Visa explains in an Employer’s Guide toPayroll Cards how a well-designed payroll card program can benefit both thecompany and its employees. Are you providing your employees enough options for receiving their wages? Are the options you currently offer meeting the needs of all your workers? Are there ways to process your payroll that could save you time and money? Is there another tool to help you approach 100% “electronic pay”?For a copy of this survey please s/2014-ee-guidepaycard.pdfus/efwsurvey or email Jeff at [email protected] for a copy.10

Benefits for Your Business6 Benefits for Your Business6 Benefits for Your EmployeesStreamline your Payroll ProcessTime and Cost SavingsPayroll Cost ControlCard SecurityReduce the number of checks you cut every pay period and pay employeeselectronically.Avoid check-cashing fees and save time otherwise spent waiting in line tocash checks.Potentially save 2.87- 3.15 per transaction by reducing costs associated withprocessing, printing and mailing checks, replacing lost or stolen checks,escheatment and more.Funds are FDIC-insured by member issuing banks. Funds are also protected bythe Visa Zero Liability Policy and Mastercard Zero Liability Policy onregistered Cards if lost or stolen.End-to-End Program ManagementConvenienceProgram implementation, support, training and robust reporting for auditingand account usage.The Card can be used anywhere Visa debit card or Debit Mastercard isaccepted.Card Inventory ManagementRewardsIssue and ship replacement cards through the Card Replacement System.Automate and setup instant-issue card inventories at your locations.Earn Payback RewardsSM on select everyday purchases at retailers andrestaurants nationwide.Employee EnrollmentAccessibilityConveniently enroll employees for a Skylight ONE Card and SkylightAccount and employees may not need to be subject to a hard pass/failverification.Safe Alternative to ChecksEmployee funds are protected and FDIC insured if lost or stolen and youcan avoid the cost of check fraud or theft.Access funds in the U.S. and at an ATM8, over-the- counter at any Visa orMastercard Member Bank, by requesting cash back at point of sale, or by usingthe Skylight Checks to access 100% of the wages.Online ManagementAccess the Online Account Center to manage funds – budgeting tools,receive direct deposit alerts, transaction alerts, and balance updates throughthe Skylight Mobile App.11

Understanding your responsibilities and the different responsibilities ofissuers, employers, program managers and employees, the differentFederal and State Laws you need to comply with and how 100%electronic pay is possible.12

Responsibilities of Issuers, State andFederal Laws and Regulations, Employers,Program Mangers & Employees Remember as the employer, you select the ProgramManager/Issuer for the paycard program. Federal banking regulation, Regulation E, states that anemployee can’t be required to establish an account at aspecific financial institution to receive their wages. Withpaycards, you are selecting the financial institution, soanother payment option always has to be provided to theemployee. State Laws may dictate the fees can and cannot be assessed. In addition to paycards, state wage and hour laws generallydictate what other choices need to be provided. In some states,one of the choices must be a paper check.13

Issuer Responsibilities Abiding by applicable state and federal banking and privacy lawsand regulations Adhering to Visa product baseline for the program Entering into a cardholder agreement with the employee Establishing risk screening protocols to ensure cards are notbeing used for illegal purposes14

Program Manager Responsibilities Contracting with their program issuer (if they themselves are nota financial institution) Adding competitive features and functions Entering into contracts with employers to provide a paycardprogram Working closely with employers during implementation andongoing program management Providing program materials (terms, conditions, disclosures) Working with employers on any impacts caused by changes instate wage and hour laws Providing ongoing cardholder support and service, including acardholder website, interactive phone system and electronicstatements Providing ongoing program management including managingcard inventory and card replacements15

Employer Responsibilities Employer responsibilities are equally important for a successfulpaycard program. They offer wage payment choices, select aProgram Manager, negotiate the contract, and execute theprogram in compliance with wage and hour and banking laws atboth the state and federal level. Employers also are responsible for educating their employeesand recommending best practices around card usage. (Yourselected Program Manager should assist with the propercommunication and employee education) Employees have a right to Choice, Access, and Transparency.These employee rights are essential to establishing a paycardprogram that is compliant and beneficial for the employee. It isthe responsibility of the Employer and Program Manager toensure these rights are carried out.16

Successful Program Requirements Transparency Transparency is key for employees to effectively use their paycardswithout incurring fees, or at least knowing they will incur a fee if theychose a particular transaction type. This is where timely education comes in so employees understandwhen they may incur fees and how to avoid them. Education helpsmake the program successful because employees understand howto use their paycard to their best advantage. Employees need to be able to make an informed choice about howthey get paid and understand fees associated with that paymenttype. If they choose the paycard program, make sure they knowwhat they are signing up for, including paycard terms andconditions, as well as the fee schedule. If an employee opts for a check, make sure they understand thatthere is typically a cost associated with use of a check cashingservice. Let them know the places where they can cash the checkfor free.17

Successful Program Requirements - Consent Consent is an important consideration because laws and regulations giveemployees the right to make a clear and informed choice about how they receivetheir wages. The laws around consent vary by state, so consult state wage and hour lawsfor specific requirements. In some states, the employee must provide written orelectronic consent before they can receive wages on a paycard. Other statesallow the employer to default to a paycard if the employee does not providedirect deposit information within a specified timeframe. Laws governingemployee compensation are dynamic. Track updates to state wage and hourlaws regarding permissible methods of wage payment as you would track otheremployee-related legislation such as garnishments, minimum wage, etc.Although your Program Manager can work with you on these topics, you areresponsible for ensuring the requirements for consent are met. The goal of paycard programs is to give employees choice of wage paymentmethod, transparency of program terms and fees, and free access to full net wagesand account information. The key point is that they understand their choices so they can make informeddecisions. The good news is that according to a recent Visa Payroll CardProgram Employee Survey, 86% of Visa Payroll cardholders prefer to be paid18by payroll card rather than a paper check.

Successful Program Features Security - Employee's net wages are accessed via the paycard but the fundsare not stored on the card. If the card is lost, the funds remain secure. Card Use - Visa Payroll cards are accepted wherever Visa Debit is acceptedand can be used in the same way for purchases, cash withdrawals, paying bills,etc. Split Pay - Employees can elect to split their net wages between paymentmethods to help them manage their finances. An example is an employee thatsplits her wages between direct deposit to her checking account and to apaycard. Access - Employees have access to their funds on payday regardless of lostmail, inclement weather, delayed delivery, whether they are on vacation, or athome sick. Portability - Employees can have a second employer add wages, transfersavings, or have deposits made from trusted sources, such as an IRS taxrefund, to the card. Choice - Employees can always change their minds about how they want toreceive payment of wages. They just need to notify their employer, usually inwriting.19

Pay-To-The Penny ChecksWhen employees need the cash in their account, you need to be able tooffer them access to 100% of their wages without incurring a fee. Employees receive 2 Skylight Checkswith their initial card pack They can order new checks for free,anytime by calling the number on theback of their cards The employee can use their check towithdraw 100% of their wages: Write the check to themselves andcash it by following the steps on thecheck Visit a Skylight check-cashing partnerto cash Skylight Checks for free20

Earned Wages21

Can I offer “instant” access to earned wages inall 50 States? Instant Usable Funds Vendor must have the ability to send an instant payment to any bank account (24/7/365). Advance Rate Vendor must be repaid in a fully legally and IRS withholding compliant manner in all 50 states. Solution cannot have the potential to cause bank charges and NSF fees to employee, includingdebiting the employee’s account. Solution must cause no change in how the company processes and funds payroll. Fees The vendor should charge a simple and transparent one-time ATM-like fee per transaction toencourage responsible spending habits and avoid confusion. Data Security/Employee Privacy The vendor’s app should not connect with Facebook or other social media sites directly The vendor should not collect location-based information about their users, for example GPS or geolocation, as it my be in violation of state-by-state legislation.22

Can I offer “instant” access to earned wages inall 50 States? Labor laws are strict and varied, and are regulated state by state The key prohibition is “wage discounting.” Colorado Wages Act - 8-4-106. Early payment of wages permitted. “Wage discounting” is illegal in the following states: Alaska, California, Colorado, Connecticut, Illinois, Indiana, Kentucky, Massachusetts,Missouri, Montana, New Jersey, New York, Pennsylvania, Tennessee, Vermont.Example: CA-212(a)1, CA-224*The following states have not clarified their position on employer wage discounting and as such, you are encouragedto conduct your own research: Alabama, Florida, Georgia, Hawaii, Idaho, Louisiana, Mississippi, South Dakota Netspend w/DailyPay is the only product that is not considered wage discounting since theemployee receives his/her complete pay. Every other competing product, or ProblemPay, isconsidered wage discounting. This problem is not solved through “employee consent.”Bottom line: if you have – or ever plan to have – employees in these states –then the only product you can offer is Netspend w/DailyPay23

Developing a low/no cost strategy to increase retention,employee productivity and the number of qualifiedapplicants that you can immediately implement thatcomplies with legislation in all 50 States.24

Paycard Partner Decision & ProgramConsiderations Decision Making Process– Team & Project Lead– Decision factors (Must haves? Nice to haves?)– Timeline?– RFP? Set Goals– Direct Deposit & Timeline (regulations/geographic footprint impact)– Goal Measurement Program Management– Card Distribution - Instant Issue or Direct to Employee– Onboarding - Electronic or Paper– Enrollment – Single, File Upload, Batch or API Ongoing Support– Partnership Owner (program rollout project, training, marketing, employee turnover,compliance, communication)Netspend, A TSYS Company25

Vendor Considerations? Financial Stability & Industry Consolidation Information Security Regulatory Compliance (compliance management & communication) Rollout Process & Resources Ongoing Resources & Program Management Employee/Cardholder Customer Service Program Tools & Features– CIP Process & Fund Access– Inventory Management– Immediate Lost Card Replacement– Free Cash Access Options– Access to Account History & Fee TransparencyAPA – An Employers Guide to Payroll CardsNetspend, A TSYS Company26

Q&AThank you!Jeff [email protected]

direct deposit information within a specified timeframe. Laws governing employee compensation are dynamic. Track updates to state wage and hour laws regarding permissible methods of wage payment as you