New BBB-Backed Payroll Card Program Aims at Fast Growth

In the hunt for a trustworthy partner, a prepaid card issuer and payment card network probably couldn't do better than the Better Business Bureau. That's the theory, at least, behind the new MasterCard-branded TrustCard, a payroll card issued by Palm Desert National Bank that initially is being offered by the Better Business Bureau in Nashville, Tenn., and some other BBB chapters with 25,000 members before a more widespread rollout. “Our goal is that by the end of 2009 we will be able to have 400,000 cards in the market,” says Kathleen Calligan, chief executive of the Better Business Bureau of Nashville. “It's an ambitious goal.” Not all of the nation's 113 BBB chapters may be interested in offering the TrustCard to accredited members, she cautions. Still, the BBB card stands a good chance of becoming a prominent program in a growing prepaid card niche. Ted Dargan, vice president of U.S. market development at MasterCard Inc., says a payroll card with 5,000 enrollees is a good-sized program. “This will be one of the largest,” he says. “If it meets projections, it will be the largest in the world.” Dargan won't reveal how many MasterCard-branded payroll cards are in circulation. Some 480,000 U.S. businesses are accredited as meeting the BBB's service and ethical standards. Consumers frequently look for the non-profit BBB's logo in a firm's advertisements when shopping for goods or services from unfamiliar providers. “We have a tremendous avenue of availability,” says Calligan. The TrustCard card has a large supporting cast. It was first announced last month by Verities Inc., a Clarksville, Tenn.-based prepaid card program developer, and Redwood Shores, Calif.-based i2C Inc., a prepaid card processor. This week, MasterCard and the Nashville BBB piped in to report that the Nashville chapter has been testing the card for about six months. The organization, which has 5,000 members in middle Tennessee and southern Kentucky, expects to have 50 members using the card after Oct. 30, according to Calligan. After 90 days the entire membership will be offered the card. Several other BBB chapters, including the one serving Oregon, Alaska, and western Washington as well as chapters in Jacksonville, Fla., Minnesota, and North Dakota, will be among the first to roll out the card. The pitch to employers is the reduced cost of payroll administration. BBB members don't pay upfront costs to offer the card, and Calligan estimates the annual savings by not having to cut paper checks is about $50 per employee. While payroll cards generally are marketed as tools for unbanked or underbanked consumers to avoid high check-cashing fees, Calligan says the TrustCard also could appeal to employees with conventional bank accounts because of its features and pricing. There are no upfront fees for employees, and it is accepted at Cardtronics Inc.'s Allpoint surcharge-free ATM network, which has 37,000 machines. Employees can transfer to other bank accounts payroll funds deposited into their TrustCard accounts via the automated clearing house. They also can designate other users, such as family members. Cardholders can have text messages sent to their cell phones alerting them to payroll deposits and other transactions, helping them manage their money and minimize fraud should they lose their cards. They also can get alerts via e-mail. Besides acceptance at Allpoint ATMs and the more than 6 million MasterCard locations in the U.S., the card has reload capabilities through the Green Dot and MasterCard rePower networks, the latter of which has about 50,000 locations, a MasterCard spokesperson says. For MasterCard, the card will generate fees when transactions go over its network. Palm Desert National Bank, which is building a business around prepaid cards, will get interchange when cardholders make purchases. A bank spokesperson did not return a Digital Transactions News call for comment. According to a study of branded prepaid card programs by Boston-based Aite Group LLC released early this year, some 53% of payroll card transactions occur at the point of sale, followed by 40% at ATMs. Aite estimated that payroll card programs generate 50% of their revenues from interchange, 30% from float, 10% from fees, and 10% from breakage (Digital Transactions News, Jan. 14).