According the NYTimes, Coca-Cola is offering its customers an electronic payment payroll service.
Restaurants, of course, tend to have low-wage employees who are barely on the grid. Many of them do not have checking accounts — and it is the rare company indeed that pays on-the-books wages in cash. Workers who don’t have a banking relationship with anyone rely on check-cashing services, which take up to 2.5 percent of the checks they cash.
Coke will market debit cards to restaurants, which will offer them to their employees. The benefit for the workers is that Coke’s $1.50 monthly charge is far less than check cashers’ fee. The benefit for the employers is saving time and money on processing checks. The actual banking part of the business will be run by Citibank and MasterCard.
It turns out that other businesses with transient employees do much the same thing:
A number of other employers, including McDonald’s, FedEx and Sears, Roebuck, currently offer their employees payroll cards, and enrollment has quickened since Visa and MasterCard entered the arena in 2001 and widened the cards’ acceptance to all locations that accept their brands.
Offering the cards are payroll processors like Paychex in Rochester, human resource companies like Ceridian in Minneapolis, and more than a dozen banks, including the Chicago-based Bank One and Bank of America in Charlotte, N.C. And even more businesses specialize in payroll cards.
In the relationship chain that Coke is envisioning, however, it’s not the employer or the banker or the payroll service. Rather, the company is leveraging its relationship with its customers to market a third-party service that’s quite outside what one would think is its normal line of business.
What’s next — Coke offering expansion financing? Or does it do that already, too?
