This article was updated on June 17, 2018.
The benefits of payroll cards for employees and organizations are many. CFOs are always seeking ways to cut costs, and payroll cards are one way to help reduce time-consuming and expensive paperwork, payroll processes and labor costs. Paying employees by check is a labor-intensive process fraught with risks. Using payroll cards helps reduce and potentially eliminate the need for cutting checks and completing time-consuming related tasks such as dealing with lost or stolen paper checks.
Promoting Employee Enrollment for Payroll Cards
The benefits of payroll cards for employees, when compared to receiving wages via paper check, are numerous. In order to promote employee adoption of payroll cards, clear communication of those benefits is crucial.
Want to get your employees excited about payroll cards? Here are six benefits to communicate:
The employee's wages become available as soon as the employer directly deposits them into the payroll card account.
2. Ease of use
With payroll cards, employees don't need a banking relationship. Paper checks require an employee to have their own bank account to deposit or cash the check, cash the check at the bank where their employer maintains the payroll account or go to a check cashing store. The employee with a paper check is often waiting in long lines, paying fees and carrying around their wages in cash (a potential security risk). Additionally, check cashing firms can be worse because they often charge high fees. With a payroll card, the employee receives their pay directly into their payroll card account and the funds are immediately available to use every payday.
3. No adjustment period
Payroll cards are accepted as prepaid debit cards for purchases or bill payments in stores, by phone and online. Employees can even get cash back in stores at the point of sale with PIN Code transactions, and ATM and over-the-counter member bank teller cash withdrawals are also available with payroll card programs when employees need quick access to cash. Employers should communicate to employees all the ways they can access cash at no charge through their payroll card program. Many payroll cards even allow you to transfer money from the payroll card to another bank account.
Payroll cards provide easy online and/or mobile app cash management that gives both balance information and account alerts. So even if the employee is on the go, they can access relevant account data and manage their money.
Some payroll cards even offer employees the option to keep loading their account from other sources by passing an additional validation process. If approved, employees can use payroll cards to receive funds not just from their employer who enrolled them for the payroll card, but also from other jobs, government benefits and even things like child support.
Visa® and MasterCard® branded payroll cards offer zero liability policy protection against non-authorized transactions that occur if a cardholder immediately reports a lost or stolen card. Reg E provides payroll cardholders with protections on disputes and error resolutions, as well.
The key to launching a successful payroll card program is not just limited to good employee communication. Employers must be aware of federal and state statutory and regulatory requirements governing payroll cards; and monitor these requirements because the compliance landscape is ever changing.
The vitality of your pay card adoption efforts will hinge on your ability to both educate your employees and understand and follow regulations. That way, employees can weigh their options and make an informed choice and the organization can mitigate as much risk as possible.