Pay day – the word conjures happiness in the hearts of employees everywhere. However, the process of getting paid is not always easy. Picking up a paycheck and driving to a bank or check cashing service can be a hassle.
For employers, the challenges of issuing paychecks are many. At the top of the list is cost – industry estimates the cost of issuing a paper payroll check between $2 -$4 per check. In an effort to drive down costs and increase efficiency, many companies have pushed as many employees as possible to direct deposit of payroll. But what about those employees that don’t have (or don’t qualify for) a bank account? Most companies have few choices but to split payroll between direct deposit and paper checks.
Alternative to paychecks
Advances in the payments industry have led to the creation of an alternative for those still receiving paper checks – a prepaid debit card in which employees can receive their paycheck. The debit card is issued to every employee that receives a paper check, while those employees who are already paid electronically can continue to do so. One great feature of this program is that employers don’t need to make changes to the way they handle direct deposit today – simply add the debit card recipients to their current direct deposit payroll system.
The employee now has his or her payroll on a card that can be used at any retailer or company that accepts credit or debit cards. The employees can view transactions and balances with free online access, and companies can increase direct deposit participation to 100%.
Benefits to employers and employees
The payroll card can be a win-win situation for both employers and their employees. As an employer, payroll becomes much easier as no paper checks are needed and the funding of payroll is done in a single action rather than reconciling a payroll account where the cashing of checks may be staggered over the course of days and even weeks.
For employees, the obvious advantage is the convenience of not having to travel to a bank or check-cashing service on payday. Employees may also save money, as some services assess a fee to cash payroll checks. Then there is the ability to pay for items with a card, which decreases the need to carry a large sum of cash, as well as an online portal to track balances and spending.
For young employees the payroll card can provide valuable experience in using and managing a debit card and balancing an account without the fear of incurring overdraft fees, as the card can only be used up to the amount that is available.
Card program considerations
When evaluating payroll card programs, companies should look for a low-cost solution that provides the company with an easy means of ordering and funding employee cards. The program should also provide multiple channels in which employees can access funds, such as through an ATM, cash advance terminal and point-of-sale.
Do you think your business and employees may benefit from a payroll card program? Contact a Horizon Bank branch near you to learn more about how PayCard may benefit your business.