While Direct Deposit continues to be the most prevalent employee payment mechanism, Pay Cards can be used as an effective alternative to paper checks for temporary (seasonal) company employees and for individuals considered as non-bankable. By electing to use the Pay Card, employees receive their net pay in a secure account that is set up and maintained by a bank. This account is linked to the Pay Card and can be used like a debit card.
Some of the benefits and implementation challenges associated with Pay Cards include the following:
Benefits of Pay Cards
- Cost savings – printing, postage, administration
- Employee convenience – can receive cash from ATMs (avoids check-cashing stores)
- Card branding can provide additional benefits
- More secure than a paper check
- Eliminates distribution delays related to natural disasters
- Communication of change to impacted employees (activations, pins, features, etc.)
- Kiosk availability for statement review/printing
- Coordination of Legal, Labor Groups, HR, Finance
iPollingTM Results Review
Recently, Peeriosity members of the HR Shared Services research area participated in a poll created using the iPollingTM technology on the subject of Pay Cards. The first poll question looked at the role that Pay Cards play in the company’s overall approach to employee payments. It was interesting to see that there was an even split between the companies that utilize Pay Cards and those that don’t. Of the 50% that do, 31% indicated that they consider Pay Cards as one of their primary options to pay employees. Another 13% responded that Pay Cards are a payment option for all employees, but not one that they actively promote. Finally, 6% said that Pay Cards are an alternative payment option that is primarily for non-bankable or seasonal employees.
The second poll question then looked at the future plans of companies as it relates to the level of usage expected for Pay Cards over the next 3-5 years for the 50% of companies that currently utilize Pay Cards. The results were evenly divided between a “moderate increase” in usage and “limited or no increase”. These results indicate that Pay Cards are filling the role that they need to at these companies and will continue to do so for the foreseeable future, with just a moderate or limited increase in their usage.
As the research results clearly point out, Pay Cards fill an important niche in the overall payment mechanism strategy at many large companies. What isn’t clear is why 50% of member companies do not currently utilize Pay Cards, and whether or not the use of Pay Cards at these companies will increase as knowledge regarding the success of Pay Card programs, and the limited risks associated with them, becomes clearer. It will be interesting to re-examine this topic in the future. Our expectation is that as companies continue to seek out more alternatives to the use of paper checks, adoption rates for the Pay Card will continue to rise.
Are Pay Cards a part of your company’s overall employee payment strategy? If not, is it time to consider this payment alternative?
Who are your peers and how are you collaborating with them?
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