Facilitating Workplace Emergency Savings Programs through Payroll Cards - AARP
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A ARP PUBLIC POLICY INSTITUTE
JULY 2020
Spotlight
Facilitating Workplace
Emergency Savings Programs
through Payroll Cards
Catherine S. Harvey and David C. John
AARP Public Policy Institute
Introduction
Even before the COVID-19 pandemic, a significant
share of US households were worried about their
Employees’ financial
finances. A top concern was not having enough stress costs businesses
money saved to cover common emergencies like an hundreds of thousands,
unexpected car repair or a medical copay.1 Payroll
cards (also known as paycards) are an existing means if not millions, of dollars
of paying employees that could also be a simple and in lost productivity and
effective way to help workers to save for emergencies
using regular deductions each pay period. absenteeism annually.
The savings plight among households is clearly
documented. A 2019 survey by AARP found that
53 percent of households have no emergency shown to help people adhere to their savings goals.5
savings account.2 For the past six years, the The concept of a payroll deduction emergency
Federal Reserve Board has found that the share of savings program is popular with employees;
households that say they would struggle to cover another national survey by AARP found that
a $400 unexpected expense has hovered at about 71 percent of working adults ages 25 to 64 said they
40 percent.3 A lack of emergency savings can put would likely participate in such a program.6
individuals at risk of material hardship, high-cost Payroll deduction emergency savings programs
debt, and possibly long-term financial insecurity.4 are the most practical next step for the growing
In response, a growing number of employers, number of employers seeking to address the
financial services providers, savings advocates, and financial needs of their workforces.7 Approximately
others are designing workplace benefits to help 43 percent of employers currently offer or plan
employees build emergency savings through payroll to offer a workplace initiative to help employees
deduction. With the potential to reach 93 percent prepare for financial emergencies.8 This aligns with
of the US workforce—the share of employees paid a broader movement by employers to take an active
by direct deposit—this approach incorporates role in improving employees’ financial wellness
principles of behavioral economics that have been as employees’ financial stress costs businessesA ARP PUBLIC POLICY INSTITUTE
JULY 2020
hundreds of thousands, if not millions, of dollars in
lost productivity and absenteeism annually.9
While various models for
There are several different models of payroll
deduction emergency savings programs.10 Rather workplace emergency
than duplicate other papers that lay out multiple savings programs are
design options, this report spotlights an emergency
savings card program that uses the established
still in their infancy, it is
payroll card system. The emergency savings card already clear that, to be
model has strong potential to achieve widespread most effective, employers
employer adoption and employee participation.
Emergency savings cards could have features should use automatic
that consumers expect from an emergency enrollment.
savings program, and would be relatively easy for
workplaces to facilitate. The cards would operate
under a regulatory framework that is favorable
to automatic enrollment. The emergency savings How Paycards Work
card model is also feasible for employers that Paycards are an increasingly popular method for
do not currently offer a retirement savings plan. US businesses to pay their employees. By 2022,
Combined, these factors distinguish the emergency a projected 8.4 million paycards will be active,
savings card program from other employer-based compared with the 2.2 million people who were
emergency savings models, making it a promising paid by paper checks in 2019.13 Paycards are a
solution to address the savings challenge at scale. version of prepaid cards in which the funds come
from employer-paid wages. The card has no value
Automatic Enrollment Makes Emergency until funds are loaded, and paycards are regulated
Savings Programs Even More Effective as a type of prepaid card.14
While various models for workplace emergency An alternative to direct deposit into a checking or
savings programs are still in their infancy, it is savings account, paycards offer employers the ability
already clear that, to be most effective, employers to transfer employee compensation electronically
should use automatic enrollment.11 With automatic to a card that employees can use to pay for goods
enrollment, an account is opened for each employee and services, build balances, access cash, or transfer
and regular payroll deductions into the account funds to another account or individual. Once paid,
are initiated unless the individual decides not employees have immediate access to their wages.
to participate. Employees can opt out, including Employers typically use paycards because they can
leaving the program, or change the amount they cost less and have fewer delays than issuing paper
save at any time. checks. This is especially valuable to employers
By making participation in a savings program the with a high-turnover or geographically dispersed
default, rather than asking employees to proactively workforce. Although originally designed to pay
sign up to save, employers could expect to see employees who do not have a bank account, today
increases in program participation similar to more than 70 percent of workers paid through a
401(k) programs that use automatic enrollment. In paycard also have a traditional checking or savings
401(k) programs, automatic enrollment has proved account.15
very popular with employees, nearly doubling the Employers contract with a paycard provider, such
participation rate in retirement plans to almost as a bank or credit union, payroll company, or
93 percent among new hires, and dramatically dedicated paycard company. The employer typically
increasing participation among younger, lower- maintains an omnibus account with the provider
income, and female employees.12 that may be managed by a third-party payroll
2A ARP PUBLIC POLICY INSTITUTE
JULY 2020
company, with subaccounts that are owned by Using Paycards for Emergency Savings
individual employees. Employee funds on their While a paycard is usually the means by which
individual payroll cards are FDIC or NCUA insured, employees receive all of their compensation,
up to the same levels as a typical bank account, employers could also use the cards to supplement
although the omnibus account used by the employer their usual payment method as a way to enable
to make those payments may or may not be a bank employees to save for the unexpected. If the card
account itself.16 is used only for emergency savings, only a small
portion of pay, such as between 1 percent and
Employees who elect to be paid on a paycard
3 percent, would be directly deposited onto the
access their funds directly by using the physical
card. The remainder of an employee’s pay would
card or indirectly through electronic transactions.17
be deposited as before into a checking or savings
Most paycard accounts can be managed online, account or another destination designated by
via phone, or with a mobile app. Paycards operate the employee. The card could be marketed as an
similarly to a debit card, with the same liability emergency savings card, including potentially
protections against unauthorized transactions. Users branding the physical card to reflect that purpose.
can make purchases both in person and online The employee would have immediate access to the
using a signature or PIN. Users can also get cash paycard funds and could decide when and how to
back at the point of a transaction or through an spend the money, ideally for unexpected expenses.
ATM. They may also withdraw their balance in full Because the employee controls his or her emergency
for free through a teller transaction. Many paycards savings, only the employee would know how the
also offer online bill pay, peer-to-peer payments, money is spent; the employer would not have access
and the ability to transfer funds to a bank account. to that information or any role in deciding how the
Employees may also choose to load their own funds money could be used.
onto the card, a feature that requires registering the
card with the provider.
According to the government regulations of The employee would have
these cards, employees must be given adequate
information to make an informed choice about immediate access to the
whether to accept a paycard. Some paycards charge paycard funds and could
a monthly maintenance fee as well as transaction
fees when the card is used in certain ways. Others
decide when and how to
have no maintenance fees and very few other costs. spend the money, ideally
The 2019 Consumer Financial Protection Bureau for unexpected expenses.
regulation of prepaid cards, including paycards,
provides a model for clear disclosures about fees
so that employees can make informed choices The emergency savings card model could also
before accepting their wages on a paycard. Some work for employers that already offer a paycard
employers have come under scrutiny for pressuring and have a substantial share of their workforce
their workforce to receive their wages on paycards.18 participating in the program. Many paycards offer
The regulation also reiterates that employers must a virtual savings wallet in addition to the usual
clearly communicate to employees that they have transaction features. Money in the savings wallet
the right to an alternative method of receiving their remains on the card, but can be spent only after
pay. Eleven states have laws that go beyond the the user proactively moves the money—via mobile
federal baseline consumer protections, typically or online app or by telephone—to the transaction
with added restrictions on fees, expanded free ATM side of the card to make it available to spend.
access, and mandatory deposit insurance.19 To also use the card for emergency savings, the
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JULY 2020
employer would deposit almost all of employee pay A key advantage of the emergency savings card
onto the transaction side of the card, with a small program versus most other models is that current
proportion going directly to the savings wallet for regulations appear to permit the use of automatic
emergencies. Currently, few employers are using the enrollment. This is further discussed in the policy
section.
savings wallet feature on paycards due to a lack of
advertising and incentives. There is evidence that Emergency Savings Models: Paycards
more than half of paycard users save money on versus a Bank or Credit Union Account
their cards, although it is not clear how many use Many of the features of a paycard are similar to
the formal savings wallet features.20 those of a traditional checking or savings account
Optimal Features of a Workplace Emergency Savings Card Program
Î Automatic enrollment. Similar to the popular enrollment method for retirement accounts,
employees would be issued a paycard and enrolled into the program unless they decide not to
participate. Although enrollment is automatic, employees retain full control over their savings and
could choose to increase or decrease their savings rate or opt out of the program at any time.
They would also have immediate access to emergency savings stored on their card. For paycards
used only used for emergency saving, the rest of the employee’s compensation would continue to
go to a bank account or other payment method selected by the employee.
Î Regular payroll deductions onto the card. Each pay period, a small portion of each employee’s
paycheck is deposited onto the card. The initial contribution rate is set by the employer but may
be changed at any time by the employee.
Î Employees own and manage their card accounts. Employees decide how and when to use their
savings. The employer receives no information about amounts on the cards or when they are
used. If an employee leaves a job, he or she retains the card.
Î Advance employee education. Before the program formally rolls out, the employer should launch
an extensive information campaign about the importance of saving for emergencies and how
the benefit will work. Messages that emphasize control, convenience, and privacy resonate best,
according to consumer research by AARP.21
Î Low fees. Employers have the responsibility to negotiate the best deal for their employees. They
should select a card that avoids fees that could erode the value of savings or prevent users from
treating their balance as an emergency savings fund. Such fees include those for overdrafts,
inactivity and low balances, for paying bills, and using for the card at point of sale purchases.
Employers should also seek providers with a large no-fee in-network ATM system and deposit
insurance.22
Î Employee choice. Federal regulation requires employers to make clear to their employees
that they do not need to accept a paycard and may select an alternate method of payment.
For an emergency savings card program, employers should provide the same notice up front
and encourage employees who choose not to participate to save through direct deposit into an
account of their choice.
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at a bank or credit union. A paycard, however, has Paycards Have Features Employees Want
several advantages over using a bank or credit in an Emergency Savings Program
union account when setting up an automatic Standard features of paycards align with consumers’
enrollment payroll deduction emergency savings top preferences for a payroll deduction emergency
program. In addition to the lower regulatory barrier savings program. A national survey found that
to automatic enrollment, paycards are convenient employees are most likely to participate in an
and inexpensive to maintain. emergency savings program that gives employees
One reason why paycards are already used by immediate access to their savings, control and
many employers is that they are accessible to ownership of their account, and privacy.26 A
workers who don’t have a bank account. In 2017, program using paycards allows employees to:
nearly 27 percent of households were classified as • Access emergency savings immediately. The
unbanked or underbanked; a full 14.1 million adults law requires paycards to allow employees to access
did not have a bank account.23 Paycards could be their compensation immediately and without
a convenient emergency savings vehicle for these cost. Convenience—funds that are available when
households. needed—is a core feature of paycards.
Another major advantage of an emergency savings • Change or pause saving at any time.
card is cost. An emergency savings fund is likely Employees who want to increase or decrease the
to have a relatively low balance and frequent percentage of pay deposited on their card can do
transactions. Most checking accounts are relatively so in the same way they would change their direct
costly for a financial institution to establish and deposit preferences with their employer. Also, at
maintain, and these costs are likely to be passed on any time, employees can opt out of the program
to the employer or the employee. With traditional altogether.
bank and many credit union accounts, fees typically
increase if the balance drops below a certain • Keep the account in case of job change. A
standard feature of paycards is that employees
amount. However, paycards do not penalize users
own their paycard accounts. If an employee
for having a small balance. In addition, paycards are
changes jobs, he or she retains the card and the
relatively low cost for employers to set up and use to
balance. Employees may also load funds from
compensate their employees.
different sources onto the card if they register it
Generally, paycards function like debit cards, in that with the card issuer and provide certain additional
users cannot spend more than the amount of money identifying information.
that has been deposited on the card.24 As a result,
most paycard users will not face overdraft fees, • Maintain privacy of transaction history and
account balance. The employer has no access
whereas many checking or savings accounts have
to information about employees’ card accounts,
substantial charges, commonly $35 per transaction,
serving only as the source of contributions to the
for overdrafts.25
account via payroll deduction. The employer does
An emergency savings card has some disadvantages not know when the card is used or why.
over an emergency savings program linked directly
to a bank or credit union account. Balances on a Consumers Are Already Saving on Cards
paycard do not earn any interest, while savings While some might assume that ready access to
accounts typically do. In addition, balances on money on a paycard would tempt the owner to
paycards are not likely to be considered if a spend frivolously, making it an ineffective savings
consumer applies for a loan. While paycards can option, a growing body of evidence points to the
easily be replaced—often for a fee—they can be opposite. Among paycard holders, 53 percent
lost or stolen. Finally, some paycard providers may report using their card for savings, a large share
charge the user a fee for checking his or her balance of whom may be doing so informally without
or for other transactions. using a designated savings wallet.27 In general,
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various forms of reminders and incentives have Existing policies appear to support automatic
been shown to increase the take-up of savings enrollment in an emergency savings paycard
features on prepaid cards, with a substantial program, but explicit confirmation from regulators
number of cardholders continuing to save even after and policymakers would facilitate the adoption of
promotion ends. In addition, data from a number of such a program. Specifically, employers and paycard
savings applications on prepaid cards suggest that providers would benefit from clarity that Regulation
employees would likely participate in an employer- E and the Bank Secrecy Act permit automatic
based emergency savings card program. enrollment in a savings card program:
Researchers have found that consumers use prepaid • Regulation E. Automatic enrollment appears
cards sold at retail locations as a means for savings. to be permissible under Regulation E, which
While there are differences between prepaid cards implements the Electronic Funds Transfer
and paycards, both are used in similar ways, Act, as long as employees know they have the
making the savings experience with prepaid cards option not to particulate. In 2016 the Consumer
applicable to emergency savings programs using Financial Protection Bureau (CFPB) issued a final
paycards: rule enhancing and amending Regulation E to
• Over the course of two years, consumers saved protect consumers of prepaid financial products.
$2 billion in the virtual savings wallet of the The prepaid rule states that “consumers are
Walmart MoneyCard prepaid card. Cardholders sometimes given a choice between two or more
who use the savings feature were entered into payment alternatives, but may fail to indicate
a drawing for cash prizes ranging from $25 to their preference. Depending on the facts and
$1,000 every month.28 circumstances—for example, the date by which
the consumer has to be paid her wages under
• A trial program by American Express found
State law—it may be reasonable for a financial
increased participation in the savings feature on
institution or other person in this scenario to
their prepaid Serve card with various low-cost
employ a reasonable default enrollment method”
forms of encouragement and incentives, ranging
[emphasis added].31
from email reminders to a $10 incentive to
enroll. Even after the 12-week promotion period, In fact, CFPB recently made clear that employers
participants continued to save on their card and could apply for protection from liability under
reported a significantly lower use of payday loans Regulation E through an application to test
9 months later.29 an automatic enrollment payroll deduction
emergency savings program.32 Applicants can
• Branding the Banking Up Bank Visa Prepaid
use a template application from Commonwealth,
Card savings wallet as a Rainy Day Reserve
Inc. that CFPB has approved for this purpose
resulted in users loading more money onto their
under CFPB’s Compliance Assistance Sandbox.
card and using it for more transactions compared
This action demonstrates CFPB’s support for
with users who received the card without being
innovative approaches to help employees build
exposed to this marketing campaign. The effort
emergency savings.
included automated savings transfers, email
reminders, and reminders about the purpose of • Bank Secrecy Act. To comply with the federal
the savings feature.30 This indicates that card users Bank Secrecy Act and anti–money laundering
recognized the need to save for emergencies and laws, financial institutions are required to
were willing to use it for this purpose. maintain a Customer Identification Program. In
the emergency savings card model, the employer
Policy Clarity Needed to Confirm is the customer and can furnish the required
Automatic Enrollment Is Allowed identity information of its employees to the
A key piece to the success of various employer- paycard provider to comply with “Know Your
based savings mechanisms is automatic enrollment. Customer” requirements. This would facilitate
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automatic enrollment. Employees would need paycards is the most favorable towards allowing
only to individually verify their identity with the automatic enrollment. As is the case with retirement
paycard provider if they choose to load their own savings accounts, automatic enrollment is the most
funds onto the card in addition to the payroll effective way for millions of Americans to start
contribution. Receiving this information from the saving for unexpected expenses. An emergency
employer both meets the purposes of the law and savings paycard program would be popular with
would be as accurate as if the information came both workers and employers. For workers it is a
directly from the employee. convenient and safe way to build their personal
emergency savings. Employers would see greater
Conclusion productivity as their workers’ economic stress
The economic crisis resulting from the COVID-19 is reduced. The recent crisis has made the need
pandemic is a reminder of the importance to to build emergency savings greater. A program
households’ financial stability of having even a using paycards is a simple, cost-effective way for
small amount of emergency savings. An employer- consumers, employers, and providers to build
based emergency savings card program offers a savings for the next unexpected financial challenge.
simple and low-cost mechanism to facilitate regular
savings with features that employees value. A Acknowledgments
savings card program can be used regardless of The authors thank Jason Ewas, Brian Gilmore, Ben
whether the employer also offers other types of Jackson, Gary Koenig, Suzanna Montezemolo, John
benefits, such as retirement savings plans. Most Scott, Lori Trawinski, and Joe Valenti for providing
important, the recent CFPB invitation to employers helpful comments on earlier drafts of this report.
to safely test emergency savings programs However, any errors are strictly the responsibility of
reinforces that the regulatory structure that governs the authors.
1 John Hancock and Greenwald & Associates, “2019 Financial Stress Survey,” Boston, MA, June 2019, https://assets.jhnavigator.
com/managed_assets/itemFiles/USA/Financial_Stress_Whitepaper_Secured_FINAL_10.28.19.pdf.
2 Catherine S. Harvey, “Unlocking the Potential of Emergency Savings Accounts,” AARP Public Policy Institute, Washington, DC,
October 2019, https://www.aarp.org/ppi/info-2019/unlocking-the-potential-of-emergency-savings-accounts.html?CMP=
RDRCT-PPI-WORKJOBS-100219.
3 Board of Governors of the Federal Reserve System, “Survey of Household Economics and Decisionmaking,” Washington, D.C.,
May 2020. Available at: https://www.federalreserve.gov/consumerscommunities/shed.htm.
4 Signe-Mary McKernan et al., “Thriving Residents, Thriving Cities: Family Financial Security Matters for Cities,” Urban Institute,
Washington, DC, April 21, 2016, https://www.urban.org/research/publication/thriving-residents-thriving-cities-family-financial-
security-matters-cities; Emily Gallagher and Jorge Sabat, “Cash on Hand Is Critical for Avoiding Hardship,” Federal Reserve Bank
of St. Louis, St. Louis, MO, November 2017, https://www.stlouisfed.org/publications/in-the-balance/2017/cash-on-hand-is-
critical-for-avoiding-hardship.
5 American Payroll Association, “Getting Paid in America: 2018 Survey Results,” San Antonio, TX, 2018, https://www.national
payrollweek.com/wp-content/uploads/2018/10/2018GettingPaidInAmericaSurveyResults.pdf; Dilip Soman and Amar
Cheema, “Earmarking and Partitioning: Increasing Saving by Low-Income Households,” special interdisciplinary issue, Journal of
Marketing Research 48 (2011): 14–22.
6 S. Kathi Brown, Catherine S. Harvey, and David C. John, “Saving at Work for a Rainy Day: Results from a National Survey of
Employees,” AARP Public Policy Institute, Washington, DC, December 2018, https://www.aarp.org/content/dam/aarp/
ppi/2018/09/rainy-day-national-survey.pdf.
7 Anne Tergesen, “Employers Help Workers Build Household-Emergency Funds,” The Wall Street Journal, June 13, 2019,
https://www.wsj.com/articles/employers-help-workers-build-household-emergency-funds-11560418206; see also Blackrock’s
Emergency Savings Initiative at https://savingsproject.org/.
8 Lori Lucas and Jack VanDerhei, “2019 Employer Approaches to Financial Wellbeing Solutions,” Employee Benefits Research
Institute, Washington, DC, September 26, 2019, https://www.ebri.org/content/2019-employer-approaches-to-financial-
wellbeing-solutions.
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9 Lost productivity and absenteeism due to stress about personal finances costs employers $190,000 per year for
businesses with 100 employees, $1 million per year for those with 600 employees, and $19 million per year for those with
10,000 employees. John Hancock and Greenwald & Associates, “2019 Financial Stress Survey.”
10 John Beshears et al., “Building Emergency Savings through Employer-Sponsored Rainy Day Savings Accounts,” Working Paper,
National Bureau of Economic Research, Cambridge, MA, 2017, https://scholar.harvard.edu/laibson/publications/building-
emergency-savings-through-employer-sponsored-rainy-day-savings; Joanna Ain, David Newville, and J. Mark Iwry, “Saving
for Now and Saving for Later: Rainy Day Savings Accounts to Boost Low-Wage Workers’ Financial Security,” Prosperity Now,
Washington, DC, June 2018, https://prosperitynow.org/resources/saving-now-and-saving-later.
11 For example, the Split to Save program that has been active for several years, and which encourages and simplifies the process
of directing a small portion of an employee’s direct deposit into a savings account, has seen only 5 percent take-up among
employees. America Saves, Consumer Federation of America, conversation with author, June 15, 2020.
12 Jeffrey W. Clark and Jean A. Young, “Automatic Enrollment: The Power of the Default,” Vanguard Research, South Plainfield, NJ,
February 2018, https://institutional.vanguard.com/iam/pdf/CIRAE.pdf.
13 Gregg Gelzinis, David Madland, and Joe Valenti, “How Workers Get Paid Is Changing: Consumer Protections Need to
Catch Up,” Center for American Progress, Washington, DC, January 2019, https://cdn.americanprogress.org/content/
uploads/2019/01/16104142/Payroll-Card-report-3.pdf.
14 Stephanie Wilshusen et al., “Consumers’ Use of Prepaid Cards: A Transaction-Based Analysis,” Federal Reserve Bank of
Philadelphia, Philadelphia, PA, October 16, 2012, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2127247.
15 Kaitlin Asrow and Andrew Dunn, “Making Payroll Cards Work for Employees,” Financial Health Network, Chicago, IL, July 2018,
table 1, https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2018/07/12015209/Making-Payroll-
Cards-Work-for-Employees-Report-July-2018.pdf.
16 National Consumer Law Center, “New Protections for Payroll Cards,” Boston, MA, March 28, 2019, https://www.nclc.org/
images/pdf/high_cost_small_loans/payroll-cards-protections-ib.pdf.
17 Employers who offer payroll cards must also offer employees an alternative way to receive their pay. Prepaid Accounts Under
the Electronic Fund Transfer Act (Regulation E), Federal Register 81, no. 225 (2016): 81047.
18 Pymnts.com, “NY Labor Department Finds Payroll Card Regulation Victory,” January 15, 2020, https://www.pymnts.com/
news/b2b-payments/2020/new-york-labor-department-finds-payroll-card-regulation-victory/#:~:text=Reports%20in%20
the%20National%20Law,card%20company%20Global%20Cash%20Card.
19 The states are Connecticut, Hawaii, Illinois, Kansas, Kentucky, Michigan, Minnesota, New Hampshire, New York, Pennsylvania,
and Vermont. Gregg Gelzinis, David Madland, and Joe Valenti, “How Workers Get Paid is Changing: Consumer Protections
Need to Catch Up,” Center for American Progress, Washington, DC, January 2019, https://cdn.americanprogress.org/content/
uploads/2019/01/16104142/Payroll-Card-report-3.pdf.
20 Kaitlin Asrow and Andrew Dunn, “Making Payroll Cards Work for Employees,” Financial Health Network, Chicago, IL, July 2018,
Table 1 https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2018/07/12015209/Making-Payroll-Cards-
Work-for-Employees-Report-July-2018.pdf.
21 S. Kathi Brown, Catherine S. Harvey, and David C. John, “Saving at Work for a Rainy Day: Results from a National Survey
of Employees,” AARP Public Policy Institute, Washington DC, December 2018, https://www.aarp.org/content/dam/aarp/
ppi/2018/09/rainy-day-national-survey.pdf.
22 For detailed recommendations on consumer protections from excessive fees, see Cities for Financial Empowerment Fund
and BankOn, “Bank On National Account Standards (2019–2020)”; and Gregg Gelzinis, David Madland, and Joe Valenti, “How
Workers Get Paid is Changing: Consumer Protections Need to Catch Up,” Center for American Progress, Washington, DC,
January 2019, https://cdn.americanprogress.org/content/uploads/2019/01/16104142/Payroll-Card-report-3.pdf.
23 FDIC, “2017 National Survey of Unbanked and Underbanked Households,” https://economicinclusion.gov/surveys/2017
household/.
24 Another feature of paycards, like debit cards, is when a merchant places a hold on funds after a purchase. The hold is usually for
a preset amount that is likely to be greater than the purchase amount and prevents that amount from being spent until it is clear
that the card holds sufficient funds for the transaction.
25 Center for Responsible Lending, “Abusive Overdraft Fees Drain Consumers Dry,” Durham, NC, March 20, 2019,
https://www.responsiblelending.org/research-publication/abusive-overdraft-fees-drain-consumers-dry.
26 S. Kathi Brown, Catherine S. Harvey, and David C. John, “Saving at Work for a Rainy Day: Results from a National Survey
of Employees,” AARP Public Policy Institute, Washington DC, December 2018, https://www.aarp.org/content/dam/aarp/
ppi/2018/09/rainy-day-national-survey.pdf.”
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27 Kaitlin Asrow and Andrew Dunn, “Making Payroll Cards Work for Employees,” Financial Health Network, Chicago, IL, July 2018,
table 1, https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2018/07/12015209/Making-Payroll-
Cards-Work-for-Employees-Report-July-2018.pdf.
28 Commonwealth, “The Power of Prizes: $2 Billion Moved Through the Walmart MoneyCard Vault,” Boston, MA, April 4, 2019,
https://buildcommonwealth.org/blog/post/the-power-of-prizes-2-billion-moved-through-the-walmart-moneycard-vault.
29 Consumer Financial Protection Bureau, “Tools for Saving: Using Prepaid Accounts to Set Aside Funds,” September 2016,
https://www.consumerfinance.gov/data-research/research-reports/tools-saving-using-prepaid-accounts-set-aside-funds/.
30 Commonwealth, “Innovation Blueprints: Scaling an ‘Emergency’ Frame and Savings on Prepaid,” Boston, MA, December 2014,
https://buildcommonwealth.org/publications/scaling_E2809CemergencyE2809D_frame_and_savings_prepaid.
31 Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E), Fed. Reg. Vol. 81, No. 225 at 81049 (November 22,
2016) (to be codified at codified at 12 CFR Parts 1005 and 1026).
32 “CFPB Takes Action to Help Employers Develop Emergency Savings Programs to Boost Worker Financial Resilience,” July 17,
2020, https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-help-employers-develop-emergency-savings-
programs/.
Spotlight 49, July 2020
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For more reports from the Public Policy
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