It wasn't too long ago that payroll cards were considered a novelty in our industry. Few companies used them, and those that did were more likely than not to only have a few employees taking advantage of them. Things are changing, though. Payroll cards are beginning to catch on more and more. The payroll card industry is growing steadily as a result.
Payroll cards are described by some as a cross between a prepaid credit card and a bank-issued debit card. They are ideal for employees who do not have regular bank accounts into which they can deposit checks or electronic transfers. They represent just one of the many options employers now have to pay their workers.
If your company has been thinking about the payroll card option, you might consider the following three reasons explaining why the cards are starting to catch on:
1. Many Workers Appreciate Them
First and foremost, many workers now appreciate the option of having the payroll card. Consider the employee who doesn't have a regular bank account. While this may seem foreign to most of us, there are large numbers of people who do not utilize the banking system in any way, shape, or form. This presents a problem on pay day.
If you do not have a bank account, you cannot take advantage of direct deposit. So how do you cash a check? People go to a check-cashing store, a local bar or restaurant, or even the customer service department of their grocery store or big-box retailer. They can get their checks cashed in any of those locations. But it comes with a price. A certain amount is deducted from the check as a service fee.
Workers appreciate payroll cards because they work just like a debit or credit card. There are no checks to cash, no check-cashing fees to pay, and no need to carry cash around in your pocket.
2. States Are Improving the Regulations
One of the big downsides of payroll cards are the various state regulations that seem incohesive at times. The good news is that states are beginning to improve their regulations in order to make them fair to both employers and employees. The more those regulatory issues are settled, the less fear there is among employers.
A big part of the regulations in some states is figuring out what is acceptable in terms of service fees and charges. On the one hand, forcing employees to accept payroll cards that charge them for every transaction is, in a legal sense, forcing them to take less than the full pay they are due. On the other hand, employees who voluntarily accept payroll cards are also accepting the fees and charges that might come with them. Regulators want to protect both parties.
3. More Providers Coming Online
Finally, payroll cards are gaining traction because more providers are coming online. A long list of startups is offering payroll cards with a variety of additional services. But the startups are not alone. Major players, like Visa and MasterCard for example, are also getting in on the payroll card market.
The more providers there are, the more the competition between them helps to keep fees and charges in check. That is good for both employers and their workers in the long run.
If you would like to learn more about how payroll cards could benefit your workers, feel free to contact us and speak with one of our representatives. BenefitMall offers a full line of payroll and benefits administration services suitable for businesses of all sizes in every sector.