With a wider range of uses than the traditional voucher, pre-paid debit cards are expected to grow in popularity among employers.
They are a more sophisticated version of electronic gift cards, and offer a greater variety of uses than the traditional voucher.
“Cards are already well established, used extensively by most of us and are widely accepted,” says marketing agecny P&MM executive director John Sylvester. “Now, prepaid cards can be used as a mechanism to deliver highly attractive employee benefits that can be offered within job packages and to improve staff retention and loyalty.
“Employers can offer their staff exclusive opportunities to enjoy valuable savings at certain leading retailers, leisure outlets and service suppliers that are only available by using a branded debit card provided by the employer.”
There are two main types of pre-paid card; a closed-loop card is essentially an electronic version of a gift voucher, redeemable at retailers, usually with a discount, but restricted to certain outlets.
The open-loop card uses an existing credit or debit card network, which means it can be used at far more outlets. “A card linked to Visa or MasterCard, for instance, is accepted in well over 20 million outlets worldwide,” says Sylvester.
Open-loop cards often display the employer’s logo alongside that of the card network. “By branding the card with the company’s name and logo, the recipient is regularly reminded how they earned the money,” says Sylvester. “A branded card is, quite simply, ‘branded cash’.”
However, they are unlikely to offer the same level of discount as closed-loop cards, and there may not be discounts on offer at all in some outlets where the card can be used.
Both types of pre-paid card are reloadable, but employees cannot spend more than the amount loaded onto them, unlike a bank debit card.
In some cases, employees can use the pre-paid cards to withdraw cash – in which case they are subject to the usual rules on income tax and national insurance contributions.
P&MM offers three pre-paid debit card offerings, which can be used anywhere that accepts MasterCard: Spree, aimed at motivation and incentive rewards; Spree-flex, suitable for use in flexible benefits programmes; and Spree-plus, a voluntary benefits scheme where employees can get 10% off their high-street shopping at selected outlets.
Insurance giant Allianz recently signed up to Spree-flex, in a bid to improve benefits offered to employees, and improve staff motivation and retention.
Employees who signed up to the scheme received a chip-and-pin MasterCard with Allianz branding. They register online through their flexible benefits scheme and select a monthly amount to be allocated to the card direct from their net salary. Funds are added to the card in line with monthly payroll.
Promotion includes emails, articles in the company magazine and personal testimonies from employees who have benefitted from the Spree-flex savings
To date, more than £1.5 million has been loaded onto Allianz employees’ Spree-flex pre-paid cards, generating more than £57,000 in savings. Due to this success, Spree-flex was offered via Allianz’s flexible benefits scheme for a second year, and saw a 100% increase in take-up.
“Cards are the future of the rewards and benefits industry as they become even more widely used in day-to-day living,” says Sylvester. “We’ve recently seen the announcement of prepaid ‘touch-card’ Oyster card-type technology while, in the US, pre-paid cards are widely used as payroll and expense cards for casual or temporary staff. This solves the problem of paying workers without bank accounts.”
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