Companies are well accustomed to the benefits of a commercial card program, and commercial card usage has grown steadily over the past three decades. Today many corporations include prepaid solutions as a core component of their overall disbursement strategy.

Opportunities to Expand Payroll Cards

Leading companies view prepaid cards as a great solution for recurring payments like payroll and incentives. Payroll card usage itself — while fairly widespread — continues to grow. Industries actively focused on establishing payroll cards include retail, healthcare and construction. Statistics vary widely by industry, but show that between 35 to 40 percent of the overall work force currently does not take advantage of direct deposit for payroll.

Not Just for Payroll Anymore

Beyond the traditional payroll application, corporations are using prepaid cards in a variety of new ways in which checks and vouchers were used in the past. Increasingly popular applications include consumer rebates, employee incentives and benefits.

For this expanded set of applications, the value proposition that a card solution provides to corporate clients extends beyond cost savings and control. Using prepaid cards for special purposes, such as purchase rebates to customers, has a branding and marketing value. For example, J.P.&nbspMorgan is working with a large insurance company to remit insurance claim payments by branded prepaid cards. The insurance client finds that not only is this solution more efficient, it enhances the corporate brand image by placing a mini billboard in its policyholders' wallets. Likewise, using prepaid cards for employee incentive or spot award programs can have an intrinsic trophy value. These examples illustrate how prepaid cards can help extend a company's broader marketing strategy.

The petty cash card is another example of how companies are applying prepaid solutions to an expanded set of transactions. For example, media companies have found the cards to be a convenient and economical concert-management alternative for paying expenses while a concert tour is on the road.

Trends Impacting Widespread Usage

A number of converging trends are contributing to the prepaid card's rising popularity. Traditionally, prepaid card usage was largely corporate driven, most commonly for payroll, but increasingly for rebates and incentives. More recently, the prepaid card market is reaching out directly to consumers.

This shift to a direct-to-consumer model accompanies a number of developments that are broadening the prepaid card's appeal. One development is the introduction of a general-purpose card. The general-purpose card carries a MasterCard^® or Visa^® logo and is reloadable once personalized and registered with the bank. Registration is necessary to satisfy the customer identification requirements of the USA PATRIOT Act and Office of Foreign Asset Control list. Once this step is complete, the prepaid card becomes linked to an electronic account, and the card's functionality expands. At that point, the card can be reloaded at participating point-of-sale locations across the U.S., as well as via an electronic transfer from a third party such as an employer or the U.S. government.

Prepaid cards are also presenting solutions to help universities electronify their cash disbursement needs. Traditionally, stored-value cards were used in cafeterias and for gaining access to the dormitory and library. Now prepaid cards are showing up on campuses for a variety of historically cash-based transactions, such as work study, financial aid reimbursement and vending machines.