Do you have employees who don’t use a bank account? According to the American Payroll Association, as many as 10% of employees in the U.S. are “unbanked," meaning they don’t have a relationship with a bank or financial institution (that percentage is even higher in certain industries like food service, hospitality, and agriculture). Paying these employees via direct deposit or paper checks doesn’t work.
But there's another option: a payroll paycard.
A pre-paid, electronic paycard works like a traditional debit card except it's not linked to a bank account. You fund the paycard with your employee’s net pay and they, in turn, can use the card to withdraw cash or make purchases. The card is funded the same way you would fund a payroll direct deposit.
Benefits of paycards include:
- Reduced costs for replacing manual, lost or stolen checks, as well as paycheck production and handling, stopping payment orders, and fraudulent cash checking.
- Greater efficiency by eliminating paper paychecks.
- Increased peace of mind for employees because they’re not cashing paychecks - instead, the money is readily available.
- Eliminates check-cashing fees for employees.
- Increases employee safety because they get just the cash they need.
- Easy for employees to use.
- Helps you stay environmentally friendly by eliminating check printing and delivery fees.
Paycards are a viable alternative to direct deposits and paper paychecks, especially since compliance issues are similar to those regulating employee direct deposits.
We'd be happy to help you find the most service-oriented paycard providers to meet your business needs. For more information about setting up paycards for your employees, just contact one of our Connected Representatives to walk you through the process!