Payroll Fund Distribution via Licensed Money Transmitter Intermediary
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Solution Overview
Problem
Individuals without traditional bank accounts face disadvantages in accessing their payroll funds, as they must travel to banks or pay significant fees to cash checks, and lack convenient mechanisms for accessing funds between pay cycles, posing risks and discouraging saving.
Innovation Solution
A system that distributes payroll funds to a payroll card, allowing employees to access funds through a Licensed Money Transmitter network, including POS terminals and ATMs, eliminating the need for bank accounts and reducing costs by using a non-FDIC insured transaction account.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If unbanked individuals cash checks at traditional banks, then they can access their payroll funds, but they must travel to banks where they do not hold an account and pay significant fees
Solution Approach 1:
The patent introduces a Licensed Money Transmitter (LMT) as an intermediary between employers and unbanked employees. The LMT receives payroll funds from employers and distributes them through a network of agents and ATMs, eliminating the need for employees to travel to traditional banks. This intermediary system provides access to payroll funds at convenient locations near employees' homes or workplaces.
Solution Approach 2:
The patent segments the traditional bank function into multiple distributed access points. Instead of requiring employees to visit a single bank location, the system creates numerous agent locations and ATMs throughout the community where employees can access their funds. This segmentation of the service delivery function reduces travel time and increases convenience.
2Ease of operation
If unbanked individuals cash checks at third-party outlets, then they can access their payroll funds, but they pay significant fees
Solution Approach 1:
The LMT acts as a mediator that eliminates the need for expensive third-party check-cashing services. By establishing direct relationships with employers and creating a distributed access network, the system removes the intermediary layer of commercial check-cashing outlets that charge high fees. Employees can access their full payroll amounts without paying service fees to third parties.
3Ease of operation
If unbanked individuals receive entire paycheck amount in cash, then they have full access to funds, but they must carry it on their person which poses security risks
Solution Approach 1:
The LMT system serves as a secure intermediary that holds payroll funds electronically until employees need them. Instead of requiring employees to carry large amounts of cash, the system maintains funds in secure accounts and provides access through authorized channels (agents and ATMs) when needed. This eliminates the security risk of carrying cash while maintaining full access to payroll funds.
4Loss of energy
If unbanked individuals have no bank account, then they avoid banking fees, but they lack convenient mechanisms for accessing funds between pay cycles
Solution Approach 1:
The LMT system serves as an alternative intermediary to traditional banks, providing fee-free or low-fee access to funds for unbanked individuals. The system allows employees to access their payroll funds between pay cycles through the distributed agent and ATM network, eliminating the need for bank accounts while providing convenient access mechanisms.
5Ease of operation
If unbanked individuals store money at home, then they have immediate access to funds, but the money could be lost or stolen
Solution Approach 1:
The LMT system acts as a secure intermediary for storing and accessing payroll funds, replacing the unsafe practice of keeping money at home. The system provides secure electronic storage with controlled access through authorized agents and ATMs, maintaining immediate accessibility while eliminating the security risks of home storage.
6Loss of energy
If custodial parent does not have bank account, then they avoid banking fees, but transfer of funds from absent parent becomes difficult
Solution Approach 1:
The LMT system serves as an intermediary for transferring funds from absent parents to custodial parents without requiring traditional bank accounts. The system can receive funds from employers (including garnished wages) and distribute them through the agent and ATM network, enabling fee-free or low-fee fund transfers for unbanked custodial parents.
Data Source
AI summary
A system is described allowing the transfer of funds, for example, from an employer to a third-party intermediary which can distribute the funds via a payroll card to an employee. The system allows a portion of the population such as that which does not use traditional bank accounts to receive funds via a payroll card at a variety of locations without the necessity of visiting the bank location of the employer to cash a check. Other embodiments of the invention allow funds to be distributed from a first party to a second party via an intermediary party.