Pros and Cons of Payroll Cards
Offering payroll cards provides another option for employees to receive their paycheck securely and electronically, without the hassle or cost of cashing checks.
Electronic payroll processing via ACH is cost-effective for employers and often preferred by employees. Although direct deposit is attractive for employees who maintain regular bank accounts, it’s not desirable for employees who use check cashing services to access their pay. According to the FDIC’s 2019 survey How America Banks, 7.1 million U.S. households still don’t have banking access.
From the employer’s standpoint, the cost of printing and distributing paychecks through traditional payroll services adds up, even if it’s just a small batch of checks. For employees who don’t have access to bank accounts for setting up direct deposit, employers may choose to offer alternative payroll options. Payroll cards provide a solution that removes the burden of printing checks while providing a convenient option for employees. Here’s an overview of some of the pros and cons of payroll cards.
Pros of Payroll Cards
Offering payroll cards for employees can improve the efficiency, security and convenience of your payroll program. Consider the benefits of payroll cards for employees:
- Real-time funding. Your employees have instant access to their funds on payday.
- Easy to use. A payroll card can be used anywhere debit cards are accepted. Employees may use the card to pay bills electronically, spend online or in-store, or get cash from ATMs.
- No fees for purchases. Employees don’t pay fees when using their cards to make purchases. Certain other transactions may incur fees, such as issuing convenience checks.
- Security features. Payroll cards provide a secure alternative to issuing checks or cash. Cardholders enjoy the fraud protection benefits of Visa’s zero liability program. If a payroll card is lost or stolen, the card balance can be frozen and a new card can be reissued.
Cons of Payroll Cards
There are some drawbacks to payroll cards that you and your employees should keep in mind. Consider the limitations of payroll cards when comparing options for payroll services:
- Lost or stolen cards. Even with security protections and zero liability, employees may worry about the implications of losing a card loaded with their payroll. The steps involved in reporting a loss, the time it takes to replace a card and potential fees for reissuing a replacement card can be a burden for employees.
- Fees for certain transactions. Depending on the payroll card program, employees may be charged fees for ATM withdrawals, convenience checks and overdrafts. Regulations require the disclosure of any fees related to payroll card programs to employees.
Payroll Solutions for Your Business
With Amegy Bank, you have control over your payroll card program and a dedicated support team to consult on payroll solutions. Learn more about payroll card services for your employees.