|Credit Union :||INOVA|
|Address :||358 South Elkhart Avenue | Elkhart, IN 46516|
|Start Date :||November 2007|
Prepaid Card User Qualifications :
- Available to anyone who prefers to have payroll loaded onto a card in lieu of a check.
- Do not need to be a credit union member.
- Must be at least 15 years of age
- Must have a valid government identification
Rates, Fees, and Terms :
- First time load fee of $5 to user
- $2.50 monthly maintenance fee charged directly to card
- $15 negative balance fee
- New users receive their PayCards in 5-7 days
Vendors/Systems Used :
- This product is a reloadable, pre-paid debit card offered through Visa. If a credit union already offers Visa credit/debit cards, the start up costs are not significant; otherwise there are implementations costs.
- Innovative Card Services, LLC (www.innovativecardservices.com) is a wholly-owned CUSO of INOVA FCU and offers payroll, gift, travel, and reloadable debit cards to 34 credit union clients. (NOTE: 15 of those credit union clients offer Payroll Cards)
- There is no set up fee to the credit union for the web-based system to be implemented in a branch
Target Market :
- Unbanked and under-banked consumers with no banking relationship
- Members who don’t qualify for the credit union’s traditional checking accounts
- SEGs that in turn can pay employees via ACH rather than with a check
Marketing Strategy :
- Various marketing materials are offered by the CUSO in both English and Spanish depending on the target market and the intent of the marketing campaign
- INOVA markets the PayCard directly to those members who don’t qualify for the credit union’s checking account
- The product is also marketed to employees of SEGs who may have blemished checking histories or prefer not to have checking accounts
Program Results/Statistics :
The credit union has approximately 350 cards outstanding of which 75 to 100 cards are active at any time. The average load per month on an INOVA FCU active PayCard is $1,048.00.
Member Benefits :
- Provides members who may not qualify or have access to a checking account with a method of direct deposit to a debit transaction card that is immediate and saves them the cost of using check cashers and carrying lots of cash
- Can pay bills electronically by providing the biller their routing and account number, similar to how traditional checking account holders would make electronic funds transfer (EFT) payments. Additionally, cardholders can make payments to billers that accept Visa as a form of payment, eliminating the cost of money orders and ensuring on-time payments
- No reload fees to the consumer
- If the member changes jobs, the card stays with the cardholder and can be used with the new employer
- Added safety – if members lose their wallets, they simply make a call and their money is safely transferred to a new card
Additional Information :
INOVA FCU began offering a suite of Visa prepaid products (gift, travel, payroll, and reloadable debit cards) in 2007. It set up a CUSO to market the products in late 2007 so that they could be offered to other credit unions as well.
The PayCard is marketed as a checkless checking account, particularly for those consumers/members that may have checking blemishes and therefore are unbanked or under-banked. Users of the card do not necessarily have to be credit union members to open a PayCard. Once the PayCard is opened the Visa ordering system generates an account number and routing number completely separate from the 16 digit number on the face of the PayCard. The cardholder provides the routing and account numbers directly to their employer and an ACH is set up so that the payroll amount is directly loaded to the card. Not only can employee wages or payroll be loaded to the card but any funds that can be sent via ACH such as social security, child support, tax refunds or disability funds can also be loaded to the card. Once the funds are loaded the card serves as a traditional checking account, but without the risk of the cardholder writing bad checks.
“Our frontline staff and branch managers were very excited about the product,” says Vicki Spicher, VP of operations for INOVA FCU, “because it enabled them to offer an alternative to the standard checking account.” An added benefit, she notes, is the fact that it is a Visa card, so members can use it as a credit or debit card, wherever Visa is accepted.
The card can be used to pay bills electronically using a routing and account number, just like making an EFT payment with a traditional checking account. Additionally, cardholders can pay bills to billers that accept Visa as a form of payment. The only caveat, notes Rebecca Kochvar, managing director of Innovative Card Services, LLC, are those merchants or landlords that don’t accept electronic payments or Visa. In that case, cardholders must withdraw money at an ATM, or do a cash advance, and purchase a money order or pay by cash.
While the card can be overdrawn, such situations are limited. In such a situation, the cardholder is charged a $15 negative balance fee. When the member’s next payroll is received, the negative balance gets paid. “The advantage of the PayCard,” explains Kochvar, “is that it goes with the cardholder even if they change jobs, the card stays with them. All they do is supply their account and routing number to their new employer and they begin direct depositing their earnings the very first pay period.”
Cardholders can check balances on their PayCard online, by an automated phone call, or at an ATM. Members can also split their direct deposit so that part of the deposit can be placed on the PayCard and the rest into a savings account. Some members use the PayCard to budget their money, notes Spicher. Part of their direct deposit goes into a checking account to pay monthly obligations and a portion goes to the PayCard to be used for shopping. “Once that money is gone, they know they can’t spend anymore, says Spicher. “The PayCard is a perfect solution to reach unbanked employees and offer them a safe, reliable method of managing their earnings and paying monthly obligations,” concludes Kochvar.