Payroll Card Users Mights Not Be Who You Think They Are

Payroll card users might not be who you think they are, according to a new report by Mercator Advisory Group, a news and reporting leader in the U.S. prepaid debit card market since 2004, and in Canada since 2014.

The report, titled U.S., Canada, and U.K. Prepaid Markets: Similarities and Differences, provides a comparison of these markets including market size, taxonomy, regulations, and key players. Every year new data is collected and analyzed using the baseline data and trending to benchmark and forecast market size for five additional years, which helps program managers and processors to anticipate where growth will happen as well as where to expect declines.

THE TYPICAL PAYROLL CARDS USER MAY SURPRISE YOU:

Findings in the report go against the old, stereotypical critiques of payroll cards catering only to the underbanked or to those in lower-income brackets. In fact, the typical prepaid user could best be described as a 30-year-old with a post-graduate degree making over $100,000 annually. This customer has a checking account, a savings account, a credit card, and may very well have a mortgage too!

• US payroll card users tend to be male 64% v. 36% female
• 33% of users are between the age 25-34
• 63% of users are between the age 25-44
• Income for payroll card users is split evenly:
  • 48% > $100,000+
  • 50% < $100,000
• 39% of payroll card users have a post-graduate degree
• Over 84% of payroll card users have a checking account over 67% have a savings account
• Over 63% of payroll card users have a credit card & over 36% pay a mortgage

OTHER COMMON MISCONCEPTIONS ABOUT PAYROLL CARD USERS:

1. The most common misconception about payroll cards is that they’re a ‘last resort’ payment method

• Today’s payroll card usage is more about personal preference vs. inability to open a checking account

2. A common misconception is that payroll card users are on the lower end of the income scale.

3. Another misconception is that payroll cards are not good for employees. If the employer enables immediate access to employee funds and avoidance of fees:

• Employers save money because electronic deposits are less costly and save labour costs
• Employees save the high costs of check-cashing fees and money orders

WHAT PERCENTAGE OF THE PREPAID MARKET ARE PAYROLL CARDS?

• Payroll cards make up about 12% of the US open-loop prepaid market
• Payroll is the second largest segment in the US open-loop prepaid market
• Loads in this area have a compound annual growth rate of 8%, up to $40.3 billion in 2018
• By 2021, the prepaid payroll market will reach $50.9 billion
• Other correlations include married (58%), white and live in the south