Three Compelling Reasons to Use Payroll Cards
Employers looking for a convenient and secure way to pay
their employees should consider using paycards.
Also known as payroll
cards, paycards establish an account to which a debit card is associated and
to which the employee’s pay is electronically deposited. Payroll cards offer
employees the convenience of mobile banking, the ability to use their card to make
purchases, and the same security that bank-issued debit cards hold. Offering
this service rarely costs the employer anything and is generally of minimal
cost to the employee.
three compelling reasons to consider paycards:
1. Immediate Access to Pay
Because an employee’s pay is electronically deposited to the card
account, employees have access to their pay without visiting a bank or check
cashing service. Although many paycard accounts have associated fees, employees
can typically access the full amount in their card account at least once a
month without incurring any fees. Employees who are located in a different state
or on vacation will have immediate access to their pay. And if the card is lost
or stolen, access to the funds can be restored quickly and easily by
transferring the original account to a replacement card.
2. Unbanked Households
According to the FDIC, in 2011 there were approximately
17 million U.S. adults living in households where no one in the household
had a checking or savings account. Known as the unbanked, these individuals are
more likely to rely on non-bank check cashing services, often paying check-cashing fees, in the range of 1.5 – 3.5 percent of the
check amount. In comparison, American Banker Magazine reports
that a bank’s monthly fee income per paycard is approximately $1.75, a relatively
minimal cost to the employee.
3. Natural Disasters
Each year, natural disasters across the United States bring
extreme challenges to the people cleaning up the mess left behind. In 2012,
776,000 people were displaced
by Hurricane Sandy alone; employees were unable to reach their place of
employment and businesses were forced to close or work at reduced capacity.
One of the challenges that businesses have under these
circumstances is paying
their employees. Although payroll companies may be affected by the storms,
most have the ability to shift payroll processing for affected offices to other
locations and keep their clients’ payroll running on time. However, shippers
and local couriers may not be able to physically deliver the payroll checks in
the storm zones and employees may not have the ability to pick up their check
or go to the bank to access their funds. Setting up a payroll cards program in
your company can help you and your employees have peace of mind if disaster
Offering the security and convenience of payroll cards is a great
way to serve the needs of your employees. Reach out to your accountant,
banker or payroll representative to set up a paycard program that works for
your employees and your company.