Docket No. LD LAB-21-15-00009-P

July 13, 2015

Michael Paglialonga

NYS Department of Labor

Building 12

State Office Campus

Room 509

Albany NY 12240

RE: LD LAB-21-15-00009-P

Dear Mr. Paglialonga,

The Center for Financial Services Innovation (CFSI) is submitting this letter in response to the request for comment by the New York State Department of Labor (DOL, the Department), published on May 27, 2015. We appreciate the opportunity to respond to the DOL’s request for comments on proposed rules for payroll debit cards as a method of payment of wages. Like you, we recognize the important role that access to high-quality financial products play in helping consumers improve and maintain their financial health. We believe that finance can be a force for good in people's lives and that meeting consumer need responsibly is ultimately good for both the consumer and the provider.

CFSI is a national authority on consumer financial health. We believe that financial health comes about when a consumer’s day-to-day financial systems enable them to build resilience and pursue opportunities. We lead a network of financial services innovators committed to building higher quality products and services. CFSI informs, advises, and connects its network to seed innovation that will transform the financial services landscape. Our vision is to see a strong, robust, and competitive financial services marketplace, where the diversity of consumer transaction, savings, and credit needs are met by a range of providers offering clear, transparent, and high-quality products and services at reasonable prices. This vision is guided by our Compass Principles – Embrace inclusion, Build trust, Promote success, and Create opportunity. These principles are built on a solid foundation that recognizes the core market values of profitability and scalability, deep customer knowledge, safety, variation and choice, consumer-provider relationships, and cross-sector participation.

Compass Guide to Payroll Cards

We have been working in the prepaid arena since 2004 when we published an article on stored-value cards in an OCC Community Development publication. In 2012, we released our Compass Guide to Prepaid, developed in consultation with industry and consumer stakeholders, which laid out a set of aspirational guidelines for design and delivery of prepaid cards. In the same year, we also developed a proposed fee box for prepaid cards in our report “Thinking Inside the Box: Improving Consumer Outcomes Through Better Fee Disclosure for Prepaid Cards.” In March, 2014, we released a Prepaid Industry Scorecard, which tracks the progress the industry has made since the release of the Compass prepaid guide.

We released the Compass Guide to Payroll Cards in January, 2015, again in consultation with a wide range of consumer and industry stakeholders including the Center for American Progress, Community Financial Resources, Consumer Action, Federal Reserve Bank of Philadelphia Payment Cards Center, First Data, Global Cash Card, Goodwill Industries International, MasterCard, MetaBank, National Consumer Law Center, Network Branded Prepaid Card Association, Rapid! PayCard, San Francisco Office of Financial Empowerment, The Bancorp Bank, UniRush, LL, Visa, and Xerox. The Guide is attached at the end of this document.

We believe some of the guidelines presented in the Payroll Guide may be helpful to you as you further consider the Department’s proposed rules for payroll cards for employees in New York State. The guidelines cover the core areas of

Choice – provide consumers a choice about how they would like to receive their wages and information that enables them to make an informed decision
Safety – provide FDIC or NCUSIF pass-through insurance, limit liability for unauthorized charges, and provide processes for dispute resolution
Affordability – provide employees access to their full net wages each pay period without cost and allow basic functions without incurring unreasonable fees
Access – provide bill-payment functionality, immediate access to wages when loaded on the card, and accessible and convenient withdrawals
Transparency – before enrolling, clearly communicate the fees and account terms; upon enrolling provide clear and understandable Terms and Conditions
Information and support – provide multiple ways for employees to access account information, provide easy-to-obtain customer service
Personalization – if cards are “instant issue,” provide a personalized permanent card

In addition, the guide suggests some “stretch practices” for providers

Convenience – provide remittance services from the payroll card, provide secondary cards upon request, allow for splitting wages between the payroll card and another account, allow employees to set up sub-accounts on the card
Mobile access – provide a mobile app or website to enable basic transactions, and account information
Education – provide alerts and advice for employees
Portability – allow employees to receive multiple sources of funds on the card

Finally, the guide suggest some “next generation” practices, which some providers and program managers are already offering

Budgeting – Provide personal financial management tools to allow employees to plan, budget, and track expenses
Savings – Provide a sub-account for savings
Credit – if offered, provide high-quality credit options that can be repaid without entering a cycle of debt.

Conclusion

CFSI believes that access to high-quality financial services is necessary for consumers’ financial health and any clarity that the Department provides in rules for payroll cards is welcome. Access to high-quality transactional services is a key component of a successful financial life for consumers. Having the ability to spend, save, borrow, and plan safely and effectively can help individuals manage their day-to-day finances, weather financial shocks, and provides them with longer-run financial opportunities.

Well-designed products built upon our Compass Principles have the potential to help people improve their financial well-being and financial health. We believe that high-quality payroll cards that align profitability for the provider with success for the consumer can be a win-win for both providers and consumers. In our vision for a financial marketplace with high-quality products, consumers will know what to expect when they choose and use services – and will have consistent experiences that reinforce healthy financial behaviors. Financial service providers will benefit from a standard, consistent, and level playing field. And markets will benefit from increased efficiency, efficacy, and innovation.

Sincerely,

Jeanne M Hogarth

Vice President

Center for Financial Services Innovation

Attachment: Compass Guide to Payroll Cards (double-click on image to open)