PODCAST: How Prepaid Has Evolved For Commercial Application

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Prepaid

The following is a transcript of the podcast episode

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

Welcome to the PaymentsJournal podcast. I’m your host Ryan Mac and on today’s episode we’re going to be talking about prepaid cards for commercial businesses with Jeff Johnson the Senior Vice President and General Manager, Commercial Prepaid, at NetSpend. Jeff, Welcome to the podcast.

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

Thanks, Ryan. Thanks for having me on.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

As prepaid cards have evolved in the customer space over the last 20 years, we’re also seeing more applications for businesses. So where do you see the most growth in commercial use?

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

Well, certainly there has been an increased use of cards over the years. It all started out in the gift card world. That was the first prepaid venture. It migrated and morphed into various other opportunities in the commercial side. Where we’ve seen the biggest opportunities for us is really in the payroll card market. Here at NetSpend, that represents a substantial part of our prepaid portfolio. We have taken the opportunity to build out our product to really address the needs of the cardholders and the abilities for them to go access their phones and get [the payment] securely and use it to pay bills and create savings accounts and things of that sort. So as we look back over the years and has been several different types of prepaid products that have come about, payroll cards certainly have been one of the types that has floated to the top.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

The makeup of the workforce has changed dramatically in the recent years, in my opinion for the better. So what impact has this had on how businesses are paying people and where do pay cards really fit into this.

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

It certainly it has changed. If you look back 10–15 years ago and you look at how entities and companies were paying their employees, it was just a standard come and get your payroll check every two weeks or every week. The employee would then take that paycheck and go to a check casher or the local bank or whatever it might be. What we’ve seen over the years is that employee has changed. That person has changed from someone who [has a traditional job]. It’s not the traditional 8-to-5 workforce that they had 10–15 years ago. You’re seeing the gig worker who may have two or three different types of gigs where they’re getting paid on. Or you might see a seasonal worker. Or you might see more of a flex worker. And so what’s happened is the businesses who are paying those people have had to augment their ability to pay them. So payroll cards and various other types of prepaid functions in the payroll world have allowed for that. We see a significant amount of our base of payroll cards being used in several different ways throughout companies. What it’s come down to is that these businesses, whether it’s a millennial or a gig worker or just going back to your traditional 8-to-5, they’re expected to provide different ways of pay, more flexibility in their pay, more secure in their pay, and that’s what that type of workforce is looking forward to that.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

I agree that people are looking for more diverse ways to be paid, but the question is, on the other side, do you think businesses are better equipped to meet the needs of this more diverse set of employees than they were a couple years ago?

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

Certainly. I think they’ve been forced to it. Certainly more than they were years back. The workforce has driven them in that way. You’ll see there’s multiple payroll card programs out there today. We’re just one of the bigger providers out there today. To see it changed through how businesses are accepting that type of payment inside their current environment today really has been driven by the workforce. They’re required to do it today. Because of the predominance of prepaid cards in some form over the years, it has become a part of the normal day-to-day life of this particular type of consumer as I mentioned earlier. I mean, they could have multiple jobs. They could have different flexibilities in the days of the week they work. Maybe they can’t come in and get their payroll check on Friday. Maybe they have another job. And so I think that because of what the workforce has required from the employers, that they certainly have had to echo that.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

If I’m a business, what things could you recommend to me that I would need to consider before I add prepaid to my payroll program?

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

I think experience is one of the biggest things that a company needs to look for in their provider today. NetSpend’s been around a while in the payroll card market, and we’ve learned over the years the best way to provide payroll card services to the ultimate user, the cardholder. We take that to the employer themselves and ask them: What are you looking for in a program? Are you looking for full program management, which is something we provide today? You’ve got to provide flexible enrollment options that are going to allow the employee to sign up. You have to allow them multiple places for distribution. You have to provide Class A cardholder support so when that cardholder has a question, they can get through it through an IVR or live customer service or through the internet. You really have to have a program that is robust in several different assets, not just providing a card and having funds loaded to it. You need all the various factors of distribution, replacement of cards if you need to, reporting tools. You need to look at all those when you’re evaluating an opportunity to roll out a payroll card program.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

As we look at 2018 and beyond, what’s next for NetSpend and commercial payments?

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

That’s a great question, Ryan. I think we’re all looking for that, whatever provider we are. I will tell you that from a NetSpend perspective we step back and look at commercial payments as we’re a disbursement opportunity. You want to pay your employees? We have a disbursement opportunity and product for that. You want to pay your employees for incentive purposes or a reward, we have a product for that. If you’re a restaurant and you want to pay your servers their tips in a special way, we have a product for that. If you want to control your expenses, we have a product for that. So as we step back and look at what we’re providing to any one company, we look at all disbursements — more as a business package than one individual product itself. I think you’ll see NetSpend look go to market more, at least from the commercial perspective, more as a business application than individual products that are inside that particular package as I mentioned whether it’s payroll or incentive or tips or things of that sort. So we’re really excited about the opportunities of real-time payments and digital disbursement and all those pieces that can create a more efficient disbursement model for any one company.

Ryan McEndarfer Editor-in-chief at PaymentsJournal.com

Well, thank you Jeff, for taking the time today to speak to us about prepaid cards for commercial business.

Jeff Johnson Senior Vice President and General Manager, Commercial Prepaid at NetSpend

Thanks, Ryan. I really enjoyed it.