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The Payroll Card Advantage: Strategic Opportunities for Financial Institutions

Prepaid cards are the fastest growing payment type, according to research from the Federal Reserve, and this understandably leads banks and credit unions to consider how they might enter this market. 

While the prepaid market growth rate is elevated from being the newest payment type, the rapid growth also points to the speed with which consumers are making use of the new payments tool. But getting into this market is not just a matter of issuing cards and trying to sell them to current customers and the general public. 

One segment that lends itself to developing this cardholder base for financial institutions is the payroll card segment. Banks and credit unions often have access to a cardholder base that they do not immediately recognize. In addition, payroll cards may offer a strategic tool that makes them profitable beyond a product line profit and loss statement. Benefits exist for cardholders, employers, and financial institutions. This paper will show how the different groups benefit and then explain what financial institutions should consider when thinking about this space.