January 1, 2021

The key to a successful wellness benefit is a better user experience powered by card-linking

One of the most frustrating challenges for People Teams creating great employee experiences is when initiatives fail despite being exactly what employees asked for. Employees criticize their employer for not prioritizing their wellbeing, but then no one uses the generous wellness benefits offered! Similarly, employers offer unlimited vacation but employees barely take any time off. Employers offer a robust learning management system but no one logs in to take courses. 

The reality isn’t as simple as employees that say one thing but do (or, in this case, don’t do) another. If you dig deeper, you’ll often realize that your “generous” benefits programs aren’t actually that well designed. In fact, just the opposite – they’re often intentionally or unintentionally designed to limit usage.

The drawbacks of marketplaces and prepaid cards

Generous wellness benefits administered via prepaid cards or marketplaces tend to have significant drawbacks that prevent employees from easily using them.

  • Both marketplaces and prepaid cards are inherently inflexible, limiting employees to a restrictive list of eligible merchants that may or may not match their preferences. For example, the marketplace might offer Barry’s Bootcamp, which is great for some folks, but not a local yoga studio or out-of-pocket therapist that might be more aligned with other employees’ preferences.
  • Both marketplaces and prepaid cards require employees to adopt new behaviors which add friction. Marketplaces require employees to remember to login while prepaid cards require employees to remember to use the right card. Because employees forget about these additional steps, they frequently end up needing to upload receipts to get reimbursed. Receipts are manually reviewed, creating a cycle of even more friction.
  • Prepaid cards have built-in spending limits which mean that employees will often have their purchases embarrassingly rejected at the point-of-sale if the amount is a penny more than their leftover allowance. Many merchants won’t allow purchases to be split across multiple cards, so the employee is left yet again with uploading receipts. Because of that, it’s virtually impossible to use up to the exact allowance limit, so employees always have unused funds.
  • Issuing and activating prepaid cards require significant administrative and logistical overhead. Branded cards often require People Teams to place bulk orders and/or pay expensive surcharges, delaying activation for new employees. For remote employees that travel frequently,  the card may not be delivered to the most convenient address. Cards can be lost and need to be deactivated and then replaced.

The rigidity of marketplaces and prepaid cards is a constant frustration and means that your employee utilization is unlikely to ever exceed 50%. Not only that, but there’s a far better alternative that’s even more automated.

Introducing card-linking to the benefits experience

About a decade ago, engineers began building APIs that connected financial institutions together to make consumer banking easier. The leading technology company in the industry, Plaid, is used in virtually every popular financial app today from Venmo to SoFi to Acorns.

The idea is simple: let users securely sync their existing bank account or credit card to make eligible benefits purchases, rather than issuing them a new card exclusively for benefits. 

Plaid lets users login to whichever bank account they want and authorize an app to have some level of access to read data, send money, or receive money. You can see a demo here and will probably immediately recognize the experience as one you’ve gone through numerous times in various apps.

At JOON, we’ve leveraged this proven technology to create a better employee experience that we call “Set It and Benefit.” Employees link a personal card for benefits-related purchases and a bank account for reimbursements. By analyzing merchant categories and an ever-growing merchant list, purchases are scanned to determine eligibility for direct deposit reimbursement.

There are significant benefits to this approach:

  • Employees don’t need to adopt new behaviors. They can link and use their preferred card(s) without having to remember to do something different before each purchase.
  • Eligibility doesn’t need to be determined immediately, so purchases never get instantly rejected. Instead, our system scans purchases afterward, automatically marking purchases as eligible or scheduled for deletion for privacy reasons. If our system misses an eligible purchase, employees have a buffer period to request a manual review. If the purchase is in fact eligible, it’ll be approved and the corresponding merchant will be added to a list for future automated eligibility. The system continually gets smarter and more flexible to accommodate an increasingly diverse wellness spectrum.
  • Employers can create fully flexible and smart benefits categories with allowed and disallowed merchants and keywords.
  • Because employees are using their own cards, they can receive partial reimbursements. If their benefits allowance is $50/month, they can still use it toward a purchase that costs more.
  • In practice, card-linking is often far more secure. Prepaid cards and marketplaces may seem to avoid the disclosure of any financial information but that’s rarely the case. Because of their frustrating limitations, employees frequently wind up uploading receipts that have other irrelevant purchases or private financial information (e.g. card numbers). That’s why card-based companies like Expensify are widely criticized because third-party individuals are manually reviewing every receipt your employees upload. With card-linking, the data is automatically analyzed by computers instead and marked for deletion if it isn’t approved for reimbursement.
  • Due to card-linking, we don’t need an established partnership in order to make a merchant eligible. More eligible merchants means more personalized wellness journeys. JOON can recommend far more wellness brands and offerings to employees based on their unique interests.

Comparing wellness benefits solutions

The benefits of card-linking are so obvious that there must be a catch. And there is – in order to create a superior employee experience, there are hard costs to using Plaid’s API for linking cards and directly depositing reimbursements. Card-linked benefits typically cost employers $1-2 more per employee per month, which is fairly insignificant compared to the typical investment in and return on wellness benefits programs

There are a number of solutions for companies of every size and preference. Here is a comparison of the most popular solutions from card-linked to marketplaces and prepaid cards.