A Success Story in Helping Lower-income Workers

By Kelly McCutchen

With the media focused on partisan gridlock in Washington, it’s easy to overlook major success stories in bringing bipartisan public policy and innovative business partnerships together to help American workers.

Part-time and other lower-income workers often drop out of the banking system because they find it is not worth it to pay the higher banking fees that come with carrying low balances in their accounts. But without a checking account, they can’t receive their paycheck by direct deposit. As a consequence, they face the expense of check-cashing services in order to access their paychecks, the expense of buying money orders to pay bills and the expense of payday loans when bills come due before payday.

In what should become a case study in free-market solutions solving public policy challenges, the National Association of Convenience Stores (NACS) has announced a new program to offer convenience-store employees a payroll card option that stands to save them many of the high costs of being “unbanked.”

Payroll cards are basically reloadable, prepaid or debit cards that allow workers to access their entire paycheck without check-cashing fees, to shop and pay many of their bills without the expense of purchasing money orders, to shop online and to avoid the danger of having what cash they have stolen.

How did this success story happen? It was a team effort. Certainly, NACS deserves top honors for working hard to find a payroll solution that will serve both their members and their employees. But there is plenty of credit to go around.

Part of the credit should be given to the state legislatures – notably, Georgia’s – that have passed predictable rules for how employers and employees could benefit from payroll cards. Part of the credit should go to financial networks like Georgia-based payment giant First Data, and MasterCard, who stepped up to partner with the convenience stores to put the power of super-efficient financial networks in place so they could offer this option for their workers.

This program will enable convenience store owners to issue payment cards to any and all of their employees. This will be mutually beneficial, allowing employees to access their pay without having to pay a fee and employers to administer pay without the cost of having to issue checks.

The program will include several new services that will directly reduce costs to low-income workers such as:

  • No Point Of Sale fees for all purchases, whether PIN or signature
  • No-charge account loading and off-loading of paychecks, eliminating check cashing fees and related inconvenience
  • No overdrafts and related fees, and available transaction and balance texting
  • A free mobile app to track balances, spending and budgeting
  • Free online bill payment and check writing, for when cash isn’t convenient and cards aren’t accepted.

The payroll cards will also be accepted at 40,000 surcharge-free ATMs and merchant locations that accept MasterCard.

It is encouraging to see our legislators paving the way for programs like this that help part-time and lower-income workers. And it is encouraging to see industry leaders, like NACS, First Data and MasterCard, joining forces to find a solution.

With Georgia leading the nation in electronic-payments technology, it should be no surprise that we are helping set the example. Still, it’s gratifying to know that the good work of our lawmakers and the innovations of Georgia’s financial tech sector put both workers and the industry in a better position.

The moral of the story: When government facilitates the free economy’s work in solving public policy problems, its ingenuity will surprise you.


Kelly McCutchen is president of the Georgia Public Policy Foundation, an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (November 13, 2015). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.