More HR leaders are turning to spend-controlled debit cards to deliver employee benefits in a way that’s flexible, inclusive and easy to manage. Learn why 60% of benefits managers want to offer cards—and how embedded finance makes it possible without becoming a fintech.
When you think of giving an employee a debit card, it’s usually in the context of trusted finance or procurement professionals, following strictly approved purchase processes.
It’s not normally put forward as a way for employees to redeem their benefits allowance via debit cards.
Or at least, you might think that if you haven’t been speaking to benefits managers recently. But according to Weavr research, giving spend cards to employees is exactly what 60% of benefits managers now want to do.
So why is that, and what can cards do to improve the benefits experience for benefits managers, employees and employers? And more importantly, what can benefits and HR SaaS platforms do to offer this without wading into the murky waters of becoming a pseudo-bank?
What benefits managers wish they could achieve
Whether a benefits manager is lucky enough to have this as their sole job focus, or more likely if it’s part of a wider set of compensation and HR responsibilities, they are the main (sometimes sole) administrator for a company’s employee benefits platform.
They have to fight constantly to keep the company’s benefits offering up to scratch – researching the most competitive package, designing benefits plans that align with the company’s values and strategic goals – and keep track of how effective the benefits are in terms of being used by employees or attracting and retaining talent.
Even if individual employees aren’t too aware of this work, a benefits manager can be one of the most influential figures in their employment.
After all, attractive perks can be a big part of the reason why an employee chose this job and this employer. And their day-to-day wellbeing and performance are highly influenced by cost factors around the job such as healthcare, childcare, commuting, or work from home costs. Finally, well-designed benefits and perks keep employees happy and less tempted by competitors’ recruitment offers.
So why do benefits managers say they want to give employees debit cards to make this work better?
The reality is that – beyond the limits of traditional benefits such as life insurance – benefits managers are still searching for more flexible solutions that can be used to craft an overall package that’s fit for purpose – and in a way that’s cost-effective, convenient for everyone who needs to use it, and gives parity to an employee population with vastly different needs.
Old-school solutions are holding benefits managers back
Take fitness and wellbeing, for example.
A traditional benefits package might offer a few different ways that employees can use their fitness budget: the classic gym membership, discounts at a few different sports retailers, that sort of thing. They can choose how they’d like to spend it and all is well.
But what about the employees who don’t live in the city, and so aren’t near any of the gyms or shops that are included in the partnership?
What if someone’s passion is swimming, but the gyms on offer don’t have a pool?
What if an employee really wants to use their benefits allowance on some new golf shoes but can’t get their discount code to work at checkout?
In each case, the budget allowance is likely to go unspent.
The organisation is throwing money away by having those partnerships, because the employees in question might as well have not had any benefits at all.
This is the kind of problem that keeps benefits managers up at night. They see their benefits platform isn’t being used by everyone or isn’t helping to compete in the recruitment market.
And so they start asking: “wouldn’t it be easier if everyone had a benefits allowance they could spend on what mattered to them instead?”
Spendable benefits – giving true flexibility and control to benefits platforms
Of course, giving employees extra pay or cash-equivalents such as store vouchers would make the spending part of their benefits system easier. But it wouldn’t make life easier for an employer trying to stop abuse of the system or for a benefits manager who needs oversight and the ability to track payments.
That’s why we’re really talking about spend-controlled cards when it comes to spendable benefits.
With a controlled flexible benefits system, employees receive a debit card powered by virtual personal budgets, designed to give them one or more themed allowances – for fitness and wellbeing, education, and so on – and behind the scenes, real-time spend controls are used to ensure they can only spend with approved merchants and categories, as well as keeping within other rules such as location of spend.
In other words, the employee who just wants some money off their new golf shoes could simply walk into their local sports retailer and tap the card – either physically or from their digital wallet. But they couldn’t take it to the Italian restaurant down the road and use their fitness budget on pizza instead.
Until recently, this kind of system would have been out of reach for a typical HR or rewards platform. Issuing cards and creating the necessary controls for spending would have meant effectively becoming a fintech.
But embedded finance options like Weavr’s employee benefits solution are changing that.
Now, benefits platform product managers can actually have an embedded finance strategy – one that is as straightforward as plugging in the tech stack and toggling on the features you want to roll out.
In other words, HR and rewards tech can finally start offering convenient, controlled cards to benefits managers and employees, and reap the rewards of increased stickiness and revenue opportunities.
And with Weavr, all of the compliance and regulatory burden is handled by us, so you never have to worry about devising your own solution for performing compliant KYB checks, anti-fraud monitoring or Strong Customer Authentication.
To learn more about how embedded finance can help complete the spendable benefits equation, take a look at our latest research on flexible benefits cards and the rise of spendable benefits.
Ready to offer truly flexible benefits without becoming a fintech?
Book a call with one of our experts to see how embedded finance can help you launch spend-controlled benefits cards—compliantly and quickly.
