The latest plan to enable consumers to bypass their banks for their financial needs involves a debit-based payroll card issued by Vancouver, Wash.-based Affinity Card Systems (ACS). ACS' ethos-branded Visa debit card account is designed to offer people more flexibility than a traditional bank account, according to ACS CEO Terry Lock.
Payroll cards have been catching on at companies around the nation as a convenient and cost-saving alternative to issuing paychecks; however, according to Lock, most payroll cards are limited in what they can offer users. The ethos card, on the other hand, opens a range of functions to individuals. "This is a debit card that allows people to take control over their own finances," Lock asserts. "People carry all they need financially in their wallet. You become your own bank." The ethos card is owned by the individual, rather than the employer, and offers a unique form of mobility, Lock explains, in that it can go with the user when they transfer from one employer to another, unlike traditional payroll cards.
Money is downloaded to the debit card via ACS. Individuals simply give their employers their ethos card numbers just as they would their savings or checking account numbers when signing up for direct deposit. Users can put as much of their pay onto the card as they wish, perhaps splitting the amount between their ethos card and a savings account, for example. With the ethos card, Lock says, people can become almost completely independent of banks and ATMs since most retailers that accept debit also offer cash back with no fee.
Also unique to the ethos debit payroll card are its security features. In addition to the usual PIN, Lock boasts that the card is fraud-proof in that the user can turn the card on and off by phone. When the card is off, no transactions can be made. The account also is FDIC insured.
According to Lock, employers will want to offer this card to their workers not only because of the savings they will realize, but because it offers benefits beyond the payroll functions. "In addition to eliminating the cost of issuing paper checks, they can view the card as a benefit to their employees. We also include a pharmaceutical discount program that's free," he says. "This is a separate card that provides discounts to users from 10 to 60 percent at 48,000 pharmacies nationwide. It's not insurance; it's just an additional discount you can get on any drug." There also is a fee-based medical discount network that offers vision and dental coverage to those whose companies do not provide this -- a boon for many smaller businesses.
Opportunity in Disguise
Still, ACS does not pretend to be a bank. Lake Oswego, Ore.-based West Coast Bank ($1.9 billion in assets) actually issues the cards. Lock says the ethos card brings account volume to the bank that it would not normally have been able to access as a regional institution since the card is marketed nationwide. He anticipates additional banks will join the network as issuing partners. Thus, ethos can be an opportunity in disguise for banks willing to sign on as participants.
The card is being targeted at the financially underserved, the unbanked, students and highly mobile people who find it impractical to maintain a traditional bank account. ACS will market ethos to corporations, staffing agencies, unions and government agencies. So far, approximately 1,000 individuals are ethos users and more than 30 companies offer it to their employees. **--Maria Bruno-Britz