By MATT BLOIS
The Brentwood payment processing company COMDATA has acquired a payroll business that serves employees outside of the traditional financial system.
COMADATA purchased SOLE, a finance company located in Oregon, this month. The company issues debit cards and allows employers to deposit paychecks directly onto the card.
COMDATA launched a similar product called Fintwist in May. According to a press release, COMDATA plans to use the acquisition to expand its pay card services to small and medium sized companies. The Fintwist card and SOLE will operate as a combined organization.
“The emergence of the gig economy, the growth and influence of Millennials in the workplace … are forcing companies to reevaluate how they serve their workers,” Comdata’s prepaid and payroll card division president Brian Radin said, according to a press release about Fintwist. “Fintwist can strengthen a company’s appeal as a destination workplace — boosting both employee retention and acquisition.”
COMDATA claims depositing paychecks on a debit card helps employers by reducing printing costs and eliminating the process of sorting and delivering physical checks. The debit card essentially works the same way as direct deposit.
The company argues that pay cards also help employees who don’t have a bank account because they won’t have to pay fees to cash a paycheck.
According to the Federal Deposit Insurance Corporation, more than 14 million adults in the U.S. didn’t have a bank account in 2017. Another 24 million people have bank accounts, but still use costly financial services like check cashing, payday loans or pawn shops.
These pay cards offer an alternative to a traditional bank account. Even if the employee leaves a company they can take the SOLE debit card — and bank account — with them to a new job.
SOLE and COMDATA also provide an app that allows cardholders to monitor and manage their money. The cards can also connect to services like online bill pay or Venmo.
In addition to providing employees with a debit card, SOLE aims to educate card holders about financial literacy. Once someone activates a card they will start seeing short, educational Facebook ads about avoiding fees and paying bills online.
A representative from SOLE also reaches out directly to each card holder to explain how to make the most of the card.
COMDATA announced the acquisition on July 8.