With 1.4 Million Employees, Wal-Mart Puts Payroll Cards on the Map

In yet another move that could shake up the financial world and boost electronic payroll cards, Wal-Mart Stores Inc. is eliminating paper checks for employees. Under the new payroll program, employees who don't have direct deposit will be issued a MasterCard-branded payroll card through the First Data Money Network Payroll Distribution Service. The program is being offered to the 1.4 million U.S. employees of Wal-Mart and Sam's Club. While Wal-Mart is shooting for a totally electronic payroll program, the retailer has set no deadline for completing the shift from paper payroll checks, a Wal-Mart spokesperson tells Digital Transactions News. “The goal is for 100% paperless payroll, but we've just started,” she says. “It's the largest payroll card implementation in the market,” says Tim Sloane, head of the debit advisory service at Mercator Advisory Group. “They've already piloted it and they're getting ready to go full bore, so it should ramp up pretty fast.” Indeed, Sloane says the Wal-Mart implementation will have a “material impact” on the reloadable prepaid card market. Wal-Mart employees will be paid either by direct deposit or through the First Data Money Network program. First Data Corp. will provide the processing and reload network for the program while the funds are held by the card issuer, Sioux Falls, S.D.-based MetaBank. Wal-Mart automatically will load pay into employee accounts, which employees can access via the Money Network MasterCard Paycard or Money Network Checks. The cards can be used anywhere Debit MasterCard is accepted, including ATMs. Employees also can access their funds at cash registers in Wal-Mart and Sam's Club stores. Employees also can write Money Network checks payable to themselves or to pay bills, like other checks. In a recent Mercator survey, payroll and payroll card suppliers said that the economy was driving a greater interest in payroll cards as a cost-cutting mechanism for employers, Sloane says. “If Wal-Mart is climbing on to this, you know they've done the due diligence to make sure that this is going to be saving them money,” he says. “If anyone was sitting on the sidelines wondering if it was going to save them money, this should pretty well close that loophole.” The Wal-Mart rollout also is a boost for First Data's Money Network, which has had a real focus on payroll, Sloane says. Money Network has “had some successes but they weren't number one,” he says. “They put together a very powerful solution that included the checking support. The consumer obviously now has the opportunity to use a card and also write a check for their rent, where card acceptance isn't supported. It also provides a mechanism for Wal-Mart to live up to all of the state regulations that require the funds be made available by check. It makes it a nice solid national program.” The launch of the electronic payroll program comes less than a month after processor Fiserv Inc. announced that Wal-Mart has become a major distributor of walk-in electronic bill-payment services (Digital Transactions News, Aug. 25). Fiserv's CheckFreePay service now offers standard and next-day bill payment at 3,755 Wal-Mart locations. The service enables customers to pay 2,500 utility, credit card, phone, insurance, and other billers at the MoneyCenter locations within Wal-Mart Supercenters, Neighborhood Markets, and regular stores.