ABA Banking Journal - July/August 2016 - (Page 48)
PAY OFF for Local Governments
BY KARI MITCHUM
ormer Speaker of the House
Tip O'Neill famously said
that "all politics is local,"
but it can sometimes be
easy to forget just how many
services local governments provide.
Emergency fire and medical services,
plowed roads, drinking water-and
yes, even that parking ticket-are
possible because of local police, fire
and rescue and public utilities.
We often talk about the many ways
banks are instrumental in their
hometown communities through their
direct financial support. But banks also
play another role in helping cities and
towns across America thrive: by providing
local governments with innovative,
cost-effective payroll solutions.
Since its founding in 1890, First
Financial Bank-a $6.67 billion
institution based in Abilene, Texas-
has seen the communities it serves
change. One of the newest ways
the bank helps communities is by
administering payroll cards to help
local entities like county governments,
school districts and city offices more
efficiently manage payroll. First
Financial's program provides employees
a way to receive their paychecks as
a direct deposit to a prepaid card, as
opposed to a paper check. And for both
payroll administrators and employees
alike, the payoffs are numerous.
"We were automating payroll and had
employees without bank accounts. The
payroll card allowed those employees
to have direct deposit without an actual
bank account," says Liesa Hackett, an
accountant for the city of Huntsville,
Texas, one of the municipalities
served by First Financial. "Now those
employees who didn't want an account
really appreciate the instant access
to their money. And payroll cards
have saved us the cost of purchasing
and printing paper checks."
Keeping the city safe
Although the paper check has been
declared dead for many years, it is still
used by many people, especially in
payroll situations where an employee
does not have direct deposit-in fact,
the average business keeps close to 20
percent of its payroll on paper checks.
Short-term employees may opt against
setting up direct deposit, and others
may not have a checking account at
all-the unbanked and underbanked
are estimated to be nearly 28 percent
of the population. They still have jobs,
however, and many are hardworking
local government employees.
Government checks are more prone to
being counterfeited, so it is beneficial for
a local entity to reduce the circulation
of their account numbers, check
styling and signatures. Criminals are
ABA BANKING JOURNAL | JULY/AUGUST 2016
known to hang out in front of check
cashing locations, often offering more
than face value for government checks.
Since the check holder won't get full
value at a check cashing store, the
offer can be hard to turn down.
Just like citizens are being told to protect
their personal information, cities need
to do the same thing-and providing
a payroll card program helps reduce
fraud. "Check fraud continues to be an
expensive reality for businesses, nonprofits and banks. Paper checks have
enough information for fraudsters to
either create very real-looking, fraudulent
checks or use the account information
to initiate fraudulent electronic
transactions," explains Debbie House,
VP of treasury management services with
First Financial. "Eliminating paper checks
helps protect funds held by our public
entities while saving time and money."
Saving the city-and
Funds on a payroll card program are
dispersed directly to the employee's
payroll card, which saves cities from
having to deal with escheatment issues.
Normally, if a government entity issues a
check and it is never deposited, they then
have to deal with escheatment. Not so on
a payroll program, since the posting of
the funds to the employee's card account
is the disbursement of funds, which
saves the city money in the long run.
Having a payroll card product also
saves time on the books. The account
debit to the payroll is one entry, not an
entry for each and every staff person.
Table of Contents for the Digital Edition of ABA Banking Journal - July/August 2016
HOW BANK STARTUPS BUILD LEADERS
LEADERSHIP LESSONS FROM THE WORST JOB I EVER HAD
BREAKING THROUGH $10 BILLION
PLATFORMS AND PARTNERS
EXCEEDING CUSTOMER EXPECTATIONS STARTS AT THE CORE
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - July/August 2016
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