baby phat debit card

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					                                                                                                                                         BY MARK HALL

         ore than 1,000 benefits and compensation professionals descended on Orlando, Fla.
         for the 2006 Prepaid Card Expo. The three-day expo brought together leading
         players from the Consumer-Directed Health Care market, payroll and corporate
incentive to talk about the issues relevant to each of these markets. Following are some
highlights from the event.
  Network branded prepaid card products are revolutionizing the payments industry and,
during the next few years, will dramatically change the way payments are made across many
industries. At the corporate level, human resource departments and benefit managers will see
the biggest change, as prepaid card products revolutionize the way consumers/employees pay
for and manage their health care benefits, receive their paycheck and participate in corporate-
driven incentive programs.
   “HR departments will soon find themselves       sulting firm BearingPoint,                        formerly paid to and managed by insurance
at the nexus of the prepaid card revolution, as   nearly 40 million people                         companies, now being deposited to and man-
these products will touch every area within the   (affecting 70 million lives)                     aged by individual HSAs.
employee benefit and compensation arena            will be enrolled in some                            What does this mean for employers?
from health care, to payroll, to corporate        form of CDHC account                             Through CDHC programs, employers and
incentive and commission payments,” said          by 2012. By 2010 nearly                          employees will have more options to help them
Jonathan Weiner, president of Prepaid Services    24 percent of insured indi-                      manage rising health care costs more
Group.                                            viduals in America will be      Weiner           effectively. Already employees are becoming
   The health care industry is shifting toward    covered by some form of CDHC insurance           more responsible for how they pay for health
CDHC with the growth of HSAs, HRAs and            program. In dollars, it represents a shift of
FSAs. According to recent statistics from con-    nearly $600 million up to $1 trillion dollars                                           continued on page 36

                                                                                     I Business & Compensation Solutions™ I March 2006 35
       Continued from page 35                                                Baby Phat Rushcard offers more functionality         employers can use to motivate employees along
                                                                             than most basic payroll cards—the ability to         with travel rewards, merchandise programs, etc.
       care. As a result, benefits managers and HR                            direct deposit paycheck, load additional cash        HR people need to see how prepaid cards can
       departments have an increased responsibility to                       and money orders onto the card at retail loca-       be used to motivate employee to determine if
       understand these programs and educate                                 tions nationally, pay bills online, check balances   they are more effective than other products.
       employees on how they can most effectively                            24/7, and breakdown spending by category to             Rim Hospitality, a Calif.-based hotel
       manage their health benefits needs and                                help employees better understand and manage          property management company with 20
       funding.                                                              their spending habits. At the same time un-          plus Western state properties representing
          Similar changes are happening in payroll,                          banked employees gain the added value of a           more than 1,500 employees and hotel
       particularly for un-banked or under-banked                            name brand they trust, valuing the product not       brands including Hilton, Marriott, Sheraton
       employees. New payroll and general-purpose                            just for its functionality, but as a perk of         and Radisson, recently implemented a
       prepaid debit card products are increasingly                          employment through a given company.                  comprehensive safety incentive program to
       being used as a way to empower employees                                 “Poor people, people who don’t have bank          reduce accidents and subsequent claim losses.
       with the basic financial services they need.                           accounts, don’t need to be told or reminded of       Instead of using cash, store gift cards and other
       Along with fostering company loyalty,                                 their struggle,” said Simmons, in his recent         prizes to incentivize their employees, Rim used
       corporations also benefit from reduced payroll                         keynote at the Expo. “They want a product that       the Best Present Prepaid MasterCard from
       costs as employees move from paper-printed                            makes them feel good about themselves and            Springbok Services, which they felt employees
       checks to direct deposit.                                             their finances. They want to                          could use wherever they chose to spend their
          One of the largest providers of basic payroll                      feel that they are in control                        incentive/rewards money.
       cards is ADP, which pays one-in-six private sec-                      of their lives and are getting                          Once they set incentive program parameters,
       tor employees in the United States through out-                       somewhere. At Rushcard,                              secured employee buy-in to the program, and
       sourced payroll services. While ADP and                               we believe in giving con-                            then implemented it among their employees
       similar companies offer basic corporate brand-                        sumers access not just to                            the results were remarkable.
       ed payroll cards, some corporations are seeing                        their money, but to the                                 In two years, they reduced worker’s compen-
       increased value in offering specialized affinity                       American Dream.”                                     sation claims 29 percent, their medical/indem-
       cards like the Baby Phat Rushcard. Developed                             Finally, prepaid card             Simmons         nity claims ratio improved dramatically, and
       by hip hop entrepreneur Russell Simmons, the                          products are just one of an arsenal of tools         they realized a $634,000 increase in savings to
                                                                                                                                  their bottom line, with a cost of only $185,000
                                                                                                                                  for the overall program. Using Springbok’s
                DEBIT CARD ACCOUNTS PREFERRED                                                                                     prepaid MasterCard was a key component to
                                                                                                                                  the overall success of the program and motivat-
            Employers favor debit card accounts because they eliminate the time and expense of cutting
         payroll checks. With the electronic transfers of funds, the money is available immediately on                            ing employees to change their behavior, reduce
         payday—which makes the employee happy. Ethos, an exhibitor at the Prepaid Expo, recently                                 insurance costs and minimize lost time at work,
         introduced its Visa Debit Card Account from Affinity Card Systems, Inc.                                                   while maintaining higher service levels.
            It’s a secure, more cost effective method of managing money for employers since it                                       Just as branded prepaid card products are
         eliminates the average payroll processing cost of $2-4 dollars per check and puts an end to                              revolutionizing multiple facets of the work
         stolen checks and stop payment fees. The card also helps employees save money by doing away                              environment, they are also creating new
         with check cashing fees. According to the Office of the Comptroller of the Currency, part of                              opportunities for cost savings, worker
         the U.S. Treasury Department, a typical un-banked consumer making basic transactions pays                                enhancement and job satisfaction, as well as
         $270 a year at a check cashing service to cash two $400 paychecks a month and to pay five                                 employee autonomy in the way they choose to
         monthly bills using money orders.                                                                                        manage their health benefits, receive their
            Prepaid cards also are a benefit to consumer-directed health care. “What is most important
         to understand,” said Tony DiBarnaba, president of Benefits Resource Inc. “is that for CDHC                                paycheck each month and spend their incentive
         plans to succeed, prepaid debit cards must integrate into a secure and transparent system that                           funds. The role of HR departments and
         is part of a customer-focused, service-oriented solution that easily integrates into the daily lives                     benefits managers during the coming years will
         of users.”                                                                                                               increasingly be to not only find the right
            Benefit Resource Inc. unveiled its new Beniversal MasterCard at the Expo. “The Beniversal                              programs and opportunities which best service
         card incorporates recent advances in prepaid debit card technology and announces a new era                               the needs of their overall corporate structure
         in consumer convenience for CDHC plans,” said DiBarnaba.                                                                 and the employees they represent and service,
            The Beniversal card is linked to online client services, including a secure feature at the                            but also as a knowledge center both for
         Benefit Resource Web site which allows consumers to track and manage pre-tax accounts.                                    corporate direction and use of the products,
         Users gain a true picture of costs, which helps them plan future spending. Such detailed                                 and providing employees the resources they
         reporting capabilities, along with online and human support resources, are essential to long-
         term consumer satisfaction with CDH plans, DiBarnaba said.                                                               need to best take advantage of these types of
                                                                                                                                  programs and services.

36 March 2006 I Benefits & Compensation Solutions™ I

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