How Do Prepaid Cards Help the Unbanked?

Paying employees accurately, on time, and in a safe and secure manner is an important part of running a business. But what about unbanked employees?

Payroll is a major touch point between employers and their workforce. It has the ability to impact the employee experience and drive satisfaction, or, alternatively, dissatisfaction.

While check or direct deposit are the traditional methods of paying employees, they both fall down when it comes to unbanked employees. 

Financial inclusivity is a crucial part of eliminating poverty. It’s a human right and something that we should all be striving for in 2022.

Prepaid card solutions can help organizations better serve their unbanked employees. Helping your employees with their financial security and making sure you can pay them without costing them money is a great way of ensuring financial inclusivity. 

Who Are the Unbanked?

Unbanked employees are those who don’t have banking accounts with financial institutions. Instead, they rely on alternative financial services, like check cashing.

There are also underbanked employees, who may have basic accounts at a bank or credit union, but still rely on alternative services to make ends meet on a day-to-day basis.

A 2019 FDIC survey estimated that over 7 million U.S. households were classed as unbanked. 

The Challenge of Unbanked Payroll

For employers with unbanked and/or underbanked employees, making payments that best serve those employees can be a challenge.

The concern to guarantee payments meet the needs of all employees means that traditional cash or check wage payments aren’t the best fit, as they are:

  • Costly for both employer and employee
  • Less secure with a higher risk of fraud
  • Prone to delay and human error
  • Loaded with extra steps and time for employees to receive their funds

This is where the benefits of payroll cards come in.

Benefits of Payroll Cards for the Unbanked

Using payroll cards for employees increases payroll efficiency while removing the risk of fraud. All employees get their funds instantly, and it saves unbanked employees the stress of having to deal with check payments.

Payroll cards are beneficial, for both you and your employees, in many ways. They:

  • Don’t require a bank account: the number one advantage for unbanked employees is that there’s no need to have a bank account. This gives them access to their wages without the worry of how they’re going to access the funds.
  • Can be easily reloaded: prepaid cards can be reloaded instantly each pay period. Whether you’re paying hourly, monthly, contractors, or a mixture of them, once the prepaid card solution is integrated with your existing payroll system, future payments are swift and easy to make.
  • Work at a nationwide network of ATMs: prepaid cards can be used just as a debit card, to shop online or in-store, to make bill payments, and even to withdraw cash at ATMs nationwide.
  • Are more secure: if a payroll card is lost or stolen, your accounts team can immediately block that card and reissue another, with digital cards available instantly and physical cards after a few days.
  • Offer immediate access to funds: no waiting around to collect checks and then having to bank them (or, in the case of unbanked employees, access check cashing services). With prepaid payroll cards, employees have access to funds as soon as they’re loaded on payday.

Support Unbanked Employees and Offer a Better Payroll Experience With dash™

Supporting your workforce, regardless of employee status, is crucial to maintaining financial security and inclusion. A lack of bank accounts doesn’t have to be an issue for them or you. Payroll cards for employees make the payroll process fast, secure, and more efficient. To take the first steps to better support your unbanked employees with free and instant access to their wages, get in touch with one of our payment specialists today.