In most companies, it is customary to pay employees via direct deposit. Other companies still pay employees with a paper check. But, there is a third option to consider: payroll cards. Payroll cards are reloadable prepaid cards that allow an employer to load wages or salary directly onto a card for an employee’s use. Employees using payroll cards can spend, withdraw or spend the money on their card, just like a debit card.
Most companies work directly with a bank in order to get an employee's pay loaded onto the card. Cards are typically backed by major card producers like Visa or Mastercard and are used just like a debit card.
Should I Consider Paying Employees with a Payroll Card?
Payroll cards can be easier for employers and employees alike. Payroll cards often increase efficiency, save time, and can even cut costs when compared to distributing paper checks biweekly.
Because the payroll card system is an automated process, it can save small businesses resources, allowing business owners to concentrate more on growing business rather than administrative tasks.
Cutting out check printing, distributing, and tracking can free up time, and save money by avoiding other paper paycheck hassles like reissuing checks or monitoring whether a check has been cashed.
Payroll Cards Are a Great Option for Employees, Too
Payroll cards provide a huge benefit for people who do not have an existing relationship with a bank. Almost 10 million households in the US are considered “unbanked,” and an additional 25 million are considered “underbanked.” For these people, a payroll card is a huge benefit.
Money is available immediately, and there is no penalty for cashing checks, as there would be with a traditional check-cashing company.
Additionally, there is no risk of overdraft or penalty for low account balance for employees.
Payroll Cards Can Be Mutually Beneficial for Employees and Employers
Payroll cards are a cost-effective and useful solution for many small businesses’ payroll needs. If your business can benefit from implementing an updated payroll card program, EPS may be able to assist. EPS can help save you money and time while streamlining your payroll process and eliminating the need for paper checks.