Early payroll pact expands access to wages at ATMs
Advance wage access company Branch has partnered with Cardtronics’ Allpoint ATM network to provide surcharge-free cash access at all Allpoint ATMs across the U.S. to its customers.
Branch provides what is called “earned wage access” for hourly employees who need to tap into wages that they have earned during an employer’s pay period but have not yet been paid. The partnership implementation helps Branch to go beyond its current promise of no hidden ATM fees to actually eliminate ATM fees altogether for its customers.
“This is the next innovation on our product roadmap to help hourly employees grow financially by giving them access to earned wages sooner than the traditional pay cycle and helping them to eliminate fees which are a major impediment to building a $400 emergency savings buffer,” said Atif Siddiqi, founder and CEO of Branch.
Branch Mastercard debit cardholders will now be able to withdraw cash at any of the 40,000 Allpoint ATMs across the U.S. with no transaction fees.
ATM surcharge-free access is the latest product evolution from Branch since its partnership last October with Mastercard and Evolve Bank & Trust to issue debit cards to Branch’s customers. Evolve Bank & Trust also provides Branch’s customers with banking services. Branch has built a customer base of 1 million users.
“The benefits to workers are clear; they have the opportunity to access funds in between payroll cycles so they can pay bills on time and avoid late fees and service disruptions," said Sarah Grotta, director of debit and alternative products advisory service at Mercator Advisory Group.
"They can also access funds to make purchases without increasing their credit card debt or other forms [of] borrowing," she said. "Any solution that early wage access providers can offer to help workers to avoid fees simply makes these products more useful and valuable to the users, like this partnership between Cardtronics and Branch that will waive ATM surcharge fees.”
The product road map for Branch includes building and offering a savings account in addition to its budgeting and personal financial management tools that help the firm deliver financial services to the millions of consumers living paycheck to paycheck. Branch reports that its target market is roughly the 78 million hourly workers in the U.S.
Siddiqi said the aim is for hourly workers to build a $400 buffer of savings to meet any emergency needs without experiencing hardship. The goal falls in line with the findings of the Federal Reserve’s Report of Economic Well-Being of U.S. Households, released in May. It found that about 40% of U.S. households would not be able to pay an emergency bill of $400 for an item such as a car repair without having to borrow money or sell something.
Branch customers tend to be less able to meet any such emergency; a survey of its customers found that 40% of its customers had no savings at all and that 18.7% had $1 to $150 in savings.
“Allpoint is the largest network of ATMs and many of them are located in places such as Target, CVS and Walgreens, which is where many of our clients shop and some of them even work as well," Siddiqi said. "This agreement with Cardtronics helps us build on the success we’ve been able to do with Mastercard and Evolve Bank & Trust."
Branch competes with other early earned wage access providers like PayActiv and DailyPay. Branch does not charge transfer or membership fees each time a consumer wants to access wages; it makes money on interchange when consumers use its Mastercard. Walmart’s deal with PayActiv provides eight free uses of earned wage access before its associates need to pay a fee.
“Making payroll available on demand through the card is not only a fantastic benefit, but it can also be great for card revenue and volume," said David Shipper, senior analyst in the retail banking and payments practice at Aite Group. "Even if the cardholder is not living paycheck to paycheck, knowing that they can receive funds at any time through the card will increase loyalty, helping to make that card their primary vehicle to make purchases or obtain cash at an ATM."