Streamline your payroll processes and provide easier access to employee funds using a reloadable payroll card. This is an employer-issued debit card that your team members can use to withdraw cash, shop online, and more.
Federal and state laws govern payroll cards, including wage and hour requirements. Be sure to review the card fees and terms carefully.
Determine Your Needs
Payroll cards are a growing trend among employers seeking to offer workers an alternative to traditional paper checks. According to research from Mercator Advisory Group, money loaded onto payroll cards will reach nearly $51 billion by 2021. Whether this payment method is suitable for your business depends on the needs of your workers, the costs involved, and other factors like the number of employees you plan to pay using this method.
When deciding on a payroll card vendor, look for one that provides a robust set of tools and features to support your business. For example, you’ll need a system that can process direct deposits quickly and accurately. It would help if you also chose a provider that works with third-party applications that can make your business run more efficiently. Rippling, for instance, is an online payroll service that allows you to pay employees using either direct deposit or pay cards in as little as 90 seconds.
Before implementing a payroll card program, familiarize yourself with federal regulations and pay card laws by state. These rules can prevent an employer from forcing employees to use a payroll card and may require you to provide other options. You’llYou’ll also want to understand the fees associated with these cards, including charges for ATM withdrawals, balance inquiries, and more. These can add up over time, so it’s essential to be transparent with your employees and monitor the charges.
Find a Vendor
Payroll cards are similar to direct deposit, but employees’ money is transferred to a prepaid debit card instead of their bank account. Employees then use the card to withdraw funds at an ATM or make online/in-store purchases. In addition to providing employees instant access to their wages, payroll cards can save employers the cost of printing checks and priceless time spent on administration tasks like preparing and mailing paper checks.
The first step in implementing a payroll card program is finding the right vendor for your business. Choose a provider with robust support and a full range of services to help you implement, monitor and grow your card program. Strong support typically includes dedicated program and client service managers who walk you through the implementation process, send steady supplies of marketing collateral, instantly issue cards, and provide training and ongoing support.
A good payroll card provider also offers a variety of options to meet your company’s-company’s specific needs. For example, look for a program that allows you to fund card accounts via an ACH transaction, which makes it easy to make mid-cycle payments and provide expense reimbursements. It would help if you also looked for a program that offers options for how your employees can access their wages, such as PIN and signature in-person purchases, remote purchases, bill payments, and transfers to other accounts (e.g., checking, savings).
Finally, ask your prospective provider about their privacy policies. You want to be sure your employee’s personal information is kept safe and protected, especially if you plan to integrate virtual card payments into your AP automation process and maximize rebates.
Set Up Your Account
With so many Americans without bank accounts, payroll cards are an easy way for employers to deliver wages. The cards are loaded with employees’ paychecks each pay period and function like debit cards. Workers can use the card to withdraw cash or purchase online, in stores, and even at gas pumps. Depending on the provider, the card may also be linked to an account at the financial institution that issues it.
When selecting a provider for your payroll cards, choose one that offers a range of services and fees that fit well with the needs of your business. Consider, for example, the minimum balance required to avoid a fee or how easily your team members can check their card balance. The provider should also be financially stable and offer the same consumer protections as other bank debit cards or matching account debit cards.
Some providers will offer “instant issue” cards, which can be loaded with funds instantly and used until a personalized card arrives. These cards can be helpful for new hires or for terminating employees whose permanent cards won’twon’t come in time to pay their final wages. Other options include providing your team members with a direct deposit or paper check. The best way to determine the right choice for your business is to consult with your payroll service provider, bank or credit card company, and a professional employer organization (PEO). They can help you find the right solution that will meet the needs of your team members and your business.
Implementation
Payroll cards are reloadable debit-like cards that can be loaded with an employer’semployer’s wages each payday. Workers can then use the card to make purchases or to withdraw cash at ATMs. The funds are transferred to the card in real time, and employees can access their money instantly. The cards usually have a Visa or Mastercard logo and can be used online, in-store, or at the ATM. Most payroll card programs are free for employers, but there may be fees on the employee side for usage, replacement cards, and balance inquiries.
Some state laws require that employees have free access to some or all of the wages on their payroll card. Also, some states mandate that employers offer other payment options besides the card, such as direct deposit and paper checks.
Offering a payroll card program effectively saves on costs associated with direct deposits and printing and mailing checks. However, you must consider all factors to decide if payroll cards suit your company and your workers. Understanding the pros, cons, and fees involved before implementing this payment method. Also, make sure to communicate clearly with your employees so they are aware of the benefits and any possible drawbacks. If you’re ready to start, Commerce Bank offers a flexible payroll card solution easily integrated into your existing payroll systems.