Payroll cards for workers without bank accounts can benefit both employers and employees.
It’s been estimated there are as many as 50 million workers in the United States who do not have access to a bank account. And guess where many of these unbanked employees work? In quick-serve restaurants.
To address this issue, some operators have turned to payroll cards, which work much like normal debit or checking cards. Most can be used at ATMs and at the point of sale at many merchants, giving employees easier access to the money they earn.
But employees aren’t the only ones who benefit from switching to payroll cards. Employers also save. Electronic payroll cards eliminate the need to issue paper checks, which can cost as much as $2.10 each to print, mail, and distribute --- not to mention additional replacement costs for checks that are lost or stolen. Payroll cards eliminate about 90 percent of that cost, as employers pay only a one-time fee of around $1.50 for each card and about $0.15 per payment transaction. “For some of these fast-food guys with lots of employees all over the country, it can be a big, big savings,” says O.G. Greene, chairman and CEO of Skylight Financial, a payroll cards provider.
Jeanne Quesenberry, controller for RPM Pizza, LLC, a company that owns and operates Domino’s Pizza stores in Mississippi, Louisiana, Alabama, and Arkansas, says her company saved more than $100,000 per year since it switched to employee payroll cards two years ago. “And it didn’t cost anything to implement because we were able to add it on to our current direct deposit system,” she says.
Payroll card experts admit, however, that not all cards are created equal. Branded cards, such as the re-loadable prepaid Visa, enjoy wider acceptance at businesses and incur fewer fees than non-branded varieties. The Visa card offers an added bonus for immigrant employees who wish to send money to relatives outside the country: Instead of cash or money orders, a second card can be sent anywhere in the world and often allows for more favorable exchange rates.
Greene points out the two different types of payroll cards available: stored-value cards that replace a paper check and bank account cards that feature the added bonus of automated clearinghouse debit. Other features to ask about are the availability of electronic statements that can be checked from the internet and the possibility of FDIC insurance for the value of the cards.
However, there are drawbacks to be mindful of. Some workers might be leery of receiving their pay electronically. Some, especially older employees, might be intimidated by the technology involved in the process. But managers can help alleviate some of those uncertainties. “Change is always hard, and there will always be a certain amount of resistance, but typically after the second or third pay period, we don’t see any complaints,” says Money Network’s Phillip Qualls.
