Paycards, also known as payroll debit cards, are reloadable pre-paid cards onto which employers deposit an employee’s net wages. Workers can then use payroll debit cards to make purchases, withdraw cash, and even pay bills.
And they’re rising in popularity among employees and employers, with one study showing that employers loaded $42 billion in gross dollar volume onto 5.9 million paycards just last year.
1. Paycards Give Immediate Access: Once deposited, the funds are available immediately.
2. No Bank Account Needed: For employees who don’t have a bank account, they can use a paycard and gain a lot of the same advantages without having to worry about monthly fees or other bank charges.
3. No Check Cashing Fees With Paycards: Some check-cashing services charge fees that depend on the check’s value so the cards eliminate this charge, although some cards have small fees for certain transactions.
4. ATM-Friendly: The cards are like debit cards that can be used to withdraw cash at ATMs. Some cards, however, may have limits on the number of transactions or charge fees for withdrawals.
5. Paycards Are Widely Accepted: Like a traditional debit card, the paycards can be used anywhere at participating merchants.
6. Fraud Avoidance: With a card, employees don’t have to worry about someone forging their check if it’s lost or stolen.
7. Customer Service: Depending on the vendor, workers can view their transaction history, make transfers to other accounts, and sometimes access account information via a mobile app.
8. Paycards Are Secure: If the card is stolen or lost, most programs are FDIC insured and/or include fraud protection so the employee’s funds are protected.
9. Paycards Offer Convenience: Employees don’t have to worry about stopping by the workplace to pick up their check or making it to the bank or check-cashing location in time. And many paycard and payroll debit card accounts can be set up online.
10. Paycards Help With Debt Avoidance: The cards don’t allow employees to take on debt so their credit rating may improve.
In addition to improving morale, paycards hold another benefit for businesses: cost savings. With paycards, employers can save on the cost of check deliveries to those employees not electing direct deposit.
To reap the benefits of paycards to employees and your business, just be sure to check if your state has any laws governing the cards (see our map for guidance). For more information about switching to paycards, contact Complete Payroll Solution at 866-658-8800.