REWARD
T he cost-of-living crisis has impacted everyone. Inflation is hitting benefits and wages, while tax increases have stifled consumer spending. To make things worse, the Bank of England predicts this economic crisis has the potential to continue into 2024. To support employees in such challenging times, employers must find meaningful and tangible incentives, especially as almost two-thirds of employees (63%) say they’d be likely to leave their jobs for more lucrative opportunities due to the cost-of-living crisis. However, offering a benefit which slots seamlessly into an employee’s life, supports financial well-being and increases brand loyalty isn’t easy. What are pre-paid cards? One answer is for employers to offer pre- paid cards. Just like a debit card, these cards can be used in stores to complete a transaction. However, they can only be used when money is added to the card and there’s no way of becoming overdrawn or racking up debt. This isn’t an unknown format to the general public – in 2018, there were 260 million pre- paid cards in circulation. These cards are a highly popular method of incentivisation. Pre-paid cards come in two forms. The first is open-loop pre-paid Mastercard or Visa cards. These function in a similar way to a debit card and can be used as a form of payment at almost any point-of- sale terminal. This allows customers to use the card at multiple retailers, giving them greater ease of access. The second is closed-loop pre-paid cards, which can be redeemed at individual retailers only and work well as part of an employee engagement strategy to encourage specific employee loyalty behaviour. In fact, a recent survey found that ‘Cash + Cash on Mastercard / Visa Pre-paid Card’ was the most popular method of receiving an incentive. Furthering this, research from Blackhawk Network Extras shows that 56% of pre-paid cashback card holders feel more valued and engaged at work by having access to their card, making now the perfect time to introduce a cashback scheme to boost staff morale. There are a variety of reasons for why pre-paid cards are so popular and why they’re such a great way to support employees during financially challenging times.
The benefits of pre-paid cards: Relevancy Firstly, pre-paid cards are becoming one of the most relevant payment methods to date. For one, it’s an incentive that younger generations want to use. Millennials (those aged 18-32) are the biggest users of pre-paid cards, being 49% of all users. This is followed by Generation X, who are 27% of pre-paid card users. Adding to this, pre-paid cards are accepted around the world. For example, some pre-paid cards can be spent anywhere a Mastercard is accepted. This is particularly useful for an employee who might want to take their card travelling. They can be used to make purchases and withdraw cash at ATMs overseas without incurring foreign transaction fees, and it eliminates the risk of carrying a lot of cash.
and managing money. This is particularly useful in the economic climate we now face, as the general public are trying so hard to have greater control on their spending. For example, Nationwide found that ATM withdrawals jumped by nearly a fifth last year compared with 2021, which they saw as a way of households using physical money to help them budget. Pre-paid cards are a way for savers to find another alternative to only spend what they can. The Blackhawk Network survey can be accessed here: http://ow.ly/ rFkW50MFGok. Choice and loyalty Offering pre-paid cards for employees to use at either multiple retailers, or specific shops employers know they value, also ensures employees are given a benefit they really want. Employees might want a variety of different options, such as: l a gym membership l free lunch l a generous pension. Giving a pre-paid card allows an employee to truly use their benefit in a way that suits them. This could range from a new piece of clothing, a meal out or even plane tickets. In doing so, employers are likely to see a boost in employee loyalty, as workers receive a benefit that can be used however they choose to, something that, during tougher times, is incredibly valuable.
Simplicity Another huge perk of pre-paid cards is the simplicity of the format. As they’re not given through a bank account, employees don’t need to worry about any administrative efforts or fees. The cards are also reloadable, meaning there’s reduced harm to the environment, as a card can be used on multiple occasions. They can also be used digitally, including being added to a smartphone, removing the hassle of needing to remember to have their card on hand. Another major benefit is how pre-paid cards can be used as a method of controlling one’s finances. Financial well-being In a recent survey conducted by Blackhawk Network, 92% of respondents said it was important that an employee benefit has a positive impact on financial well-being. In addition to that, 30% of employees think that an increased focus on financial well- being is the reward and benefits area that needs to change most post Covid-19. As you can only spend the amount of money that’s loaded onto the card, pre-paid cards can be a helpful tool for budgeting
The beauty of pre-paid cards For most of us, 2023 will be one of the toughest financial years of our lives. It’s imperative to make sure your employees feel valued and supported. Having positive staff will only encourage business opportunities and efficiency amongst team members. A pre-paid card is a brilliant way to do this. It offers employees a vast array of options to use their benefits and help increase loyalty to their employer. n
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| Professional in Payroll, Pensions and Reward |
Issue 88 | March 2023
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