Is there value in implementing paycards at work?

A paycard mimics the functions of a debit card and can reduce the hassle of paper check writing for an organization’s payroll department. Paycard usage is increasing as it becomes more challenging to cash paper checks and as businesses recognize the value in accepting electronic payments as opposed to a check. For organizations who are intent on streamlining their payroll process and reducing their paper consumption, paycards are an ideal suggestion for employees who do not have bank accounts and are not interested in direct deposit. According to NACHA, companies can save up to $3.15 per payment by using direct deposit instead of paper checks.* A company with 100 employees on paper checks can save nearly $19,000 a year by switching to direct deposit. Channeling our inner Letterman (except we’re serious!), we bring you:

Top 10 Reasons to Implement Paycards**

1. Seamless integration into your existing payroll system
2. Increase employee productivity
3. Protect funds
4. Prepare for the unexpected
5. Eliminate check delivery fees
6. Minimize stop payment exposure
7. Remove escheatment liability
8. Reduce check fraud
9. Empower employees
10. Go green—and reduce your carbon footprint

Employees also benefit from the use of paycards. Checks can be lost in the mail, while a paycard can be kept in a safe place or on one’s person at all times. Since direct deposit can be used to load a person’s earnings onto the card, the steps of receiving the check in the mail, locating identification, and taking the check to the bank to be cashed are all eliminated. As mentioned previously, there are workers who do not have bank accounts. The holder of a paycard will not have to deal with check cashing fees  In addition, because paycards include the selection of a PIN number, they are much more secure. If lost, it is unlikely that someone else could guess the PIN and use the card. For these reasons a paycard is valuable to employees as well as employers

While there has been concern expressed in the media about the security of paycards and the potential for hidden fees, paycards are subject to significant regulation. An informative explanation of how paycards are regulated can be found here. To summarize, many states have statutes that allow for employees to access their full wages, with no fee, at least once per month. Federal protections include Regulation E, which requires disclosure of fees associated with an employee’s use of the card. Fees may be incurred, particularly if the cardholder goes outside the free options to access his/her money, but these fees must be disclosed. Funds on paycards are insured by the FDIC, and branded paycards (Visa, MasterCard, etc) often enjoy a zero cardholder liability policy in case of a lost or stolen card or fraudulent behavior (by someone other than the cardholder).

At Pamiris, one of the advantages we offer with our service is our relationship with TFG Card Solutions, Inc., whose website can be accessed here. Employers simply have their employee fill out the TFG card form and the Pamiris direct deposit form and send both to Pamiris. We enter the information into our system and the card will be used for direct deposit on the very next payroll, in most cases. There are many options for card use, such as dividing one’s wages between the employee and a card held by his/her spouse, the ability to check balance online or over the phone, and many others. The TFG Frequently Asked Questions page can explain the many card characteristics.

Resources:
https://www.paperlesspay.org/
http://usa.visa.com/corporate/corporate_solutions/payment/payroll-faq.html
http://paycard.americanpayroll.org/compliance-overview
https://www.tfgcard.com/index.php/pages/employersfaq

*Source: Employee Benefit Research Institute and Mathew Greenwald & Assoc., Inc., Retirement Confidence Survey
**Source: TFG Card Solutions, Inc. promotional material