Payroll cards are prepaid debit cards loaded with employees’ paychecks each payday. They work the same way as direct deposit but offer a few added benefits.
Employees can use their cards anywhere that accepts debit card payments and get cash at ATMs. They can also add funds to their cards for online purchases.
Streamlined Payroll Process
Payroll cards are a popular option to replace traditional paper checks for employers. They work by digitizing the entire payroll process and allow employees to receive their wages instantly.
They are an ideal solution for avoiding the extra fees and expenses of paper check processing, such as ink, postage, bank charges, and the time spent managing paper paychecks. The employer adds the wages to a card linked to their financial institution, and can be used by the employee to withdraw money in person, shop online, or make bill payments.
A card also helps those who don’t have or can’t get a bank account to access their salaries. Over 60 million Americans are estimated to be unbanked, and many workers are employed. Payroll cards give those employees a way to receive their wages while providing them with a record of transactions and responsibility to help them qualify for a traditional bank account.
Additionally, when using payroll cards, companies can use their existing HR systems and direct deposit systems for streamlined operations. This can save on costs and reduce the chances of human errors with spreadsheets and manual processes. A centralized payroll system integrated with scheduling and timekeeping software can help simplify this process even more.
Reduced Risk of Fraud
Payroll cards are a secure way to give employees their salaries. While paper checks are easy for criminals to steal, payroll cards require a PIN and signature to access funds and are more secure than cash. If a card is lost or stolen, employees can report the card to their employer and be issued a new one that still has their current balance on it. This eliminates the need for a replacement check and helps bridge the financial inclusion gap for workers who lack traditional bank accounts or have limited banking options in their communities.
Employees can use their cards to withdraw cash at ATMs or make purchases. Payroll cards for employees function as debit cards and can be used at retailers that accept them, including grocery stores. This makes them ideal for the food service industry, where tips can also be sent to the card.
Some payroll card programs have fees to set up and maintain the cards, but these shouldn’t be passed on to employees. However, there may be ATM fees or other charges to withdraw money or access the balance on a card. These fees should be clearly outlined to employees by the card issuer before they start using their cards.
Regardless of how they’re used, payroll cards offer improved security and help improve the financial infrastructure for all types of businesses. They reduce costs, promote transparency and accountability for the company, and can drive employee loyalty.
Easier to Manage
For companies that need to pay employees regularly, payroll cards are an efficient way of doing so. Payments are made electronically so employees can access their funds anytime and anywhere they have internet or mobile connectivity. This gives them peace of mind, especially during a natural disaster, power outage, or other emergency. It also eliminates the need for paper check processing and mailing and helps save on fees for reprinting and mailing costs.
Employers can also reduce payroll card expenses by leveraging a digital wallet solution that allows employees to access their wages 24/7 through online portals and applications. This is an excellent option for remote workers or those working during a storm or a natural disaster that prevents them from leaving their homes. They can also use the same digital wallet platform to manage their paychecks and receive payments for other purposes, such as rent or utilities.
One drawback to payroll cards is that some companies charge fees for their use. These include ATM withdrawal charges, balance inquiries, fund transfers, and monthly maintenance fees. Some card issuers also charge a fee to replace lost or stolen cards. Businesses need to understand any fees they – or their employees – might be required to pay to fully explain them to employees before offering payroll cards as a payment method.
More Flexible
Payroll cards are a burgeoning alternative to more traditional forms of payroll payment, such as paper checks or direct deposit. These prepaid debit cards are loaded with employees’ net wages and can be used in the same manner as a regular bank card to make purchases or cash withdrawals at point-of-sale and ATM locations that accept them. Employees can also access their funds through mobile apps and online portals. Unlike direct deposits, payroll cards don’t require a checking or savings account and avoid check-cashing fees.
With payroll cards, your company can also help boost sustainability by eliminating the need for physical cash, cheques, and accounting stationery. They also cut down on the use of plastic and help reduce carbon footprints. Ultimately, using payroll cards increases the speed, pace, and accuracy of payroll processing and salary disbursals.
Finally, payroll cards are handy for unbanked and underbanked workers who may struggle to get the money they’re owed when it’s in paper form. Many must pay fees to cash their checks or obtain money orders, which can add up over time. With a payroll card, your company can provide this demographic with the financial inclusion they deserve and drive worker loyalty and productivity. When salaries are instantly credited to the card, employees can spend and save their income without the hassle and trust that their employer is reliable.
