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Paycard programs can help shift more employees to an
electronic pay solution

The benefits of getting every employee on an electronic payroll program can be significant -- decreased paperwork and expense, reduced chance of lost or stolen funds and happier employees who have faster and easier access to their money.

In the past, with direct deposit alone, few employers could reach this level of efficiency. A common impediment, many found, was employees without bank accounts. Currently, an estimated 13 percent of American households are "unbanked." (1) However, according to Scott Wisdom, Ceridian product manager, many other factors can also come into play.

"Some long-term employees are unwilling to give up their paper checks and go on direct deposit, even if they have bank accounts," he explained. "In surveys, we hear many reasons. For example, some want to keep their salary information from other members of their household, and some like the feel of receiving their pay and holding it in their hands. And, no matter what the reasoning, employers are justifiably reluctant to take an aggressive stance and force employees to change."

A second paperless electronic option
Ceridian offers another alternative that can help employers bring more of their people, banked and unbanked alike, into an electronic payroll solution: Ceridian PayCard.

With Ceridian PayCard, each employee on the program receives a personal, Visa®-branded stored value card that works like a bank debit card. Every pay period, funds are automatically deposited into the paycard account, giving employees instant access to their money. The card is "loaded" by the funds in the account, so, unlike a gift card, it has no value of its own. Users can withdraw cash from any ATM or pay any merchant that accepts Visa debit cards.

"Think of paycards as creating a virtual bank account, one that every employee can have, even if they are not eligible for a traditional bank account," noted Wisdom. "And, for those who do have bank accounts and are avoiding direct deposit for other reasons, a paycard solution still gives them hands-on personal control of their funds, eliminating some of the reasons for not finally evolving from paper checks."

The benefits to employees of using paycards are similar to those of using direct deposit: no more waiting in bank lines, no more waiting to receive checks or for them to clear, and less handling of cash. In fact, for employees who don't have bank accounts and live in an "all cash world," the benefits of the paycard option can be especially significant.

"Doing all your transactions in cash can be dangerous and expensive," said Wisdom. "You run the risk of loss or of becoming a crime victim. Employees also have to spend a lot of money to get or use their money. Typically, check cashing fees alone take two to three percent off the top, and fees for buying money orders or sending money to remote family are even more burdensome. The paycard program can help employers save their people from many of these problems. We see employees' mindsets changing quickly, from 'here's this check, give me all my cash' to 'my money's safely in my account, I'll use it as I need it.'"

A flexible solution
Wisdom notes that employees of all income levels are finding creative ways to make use of the paycard option. For example, some use secondary cards to inexpensively provide money to their kids at college. Others report using paycards as a budgetary tool, for example, keeping a set amount on the card for recreational or discretionary purchases.
Many use the card to send money to relatives in other countries, avoiding risk and fees.

"Now, all an employee has to do is send their relatives a secondary card one time, and they can fund it from their primary account as they wish, by the push of a button or a simple phone call," Wisdom explained. "The relative can use the card wherever Visa debit cards are accepted, worldwide. No more expensive wire transfers or dealing with wads of cash."

And the card isn't limited to salary alone. "Expense reimbursements, per diems, travel allowances -- whatever a company pays to an employee can be paid through the Ceridian PayCard," said Wisdom.

Employers also have flexibility as to fee structure, balancing how much of the modest costs of the program are borne on the employer side, and how much by employees.

Make the most of the paycard opportunity
The paycard option can provide significant benefits for employer and employee alike. However, as with any unfamiliar offering, a lot of the understanding and acceptance of the program can depend on the quality of employee communications. Ceridian has the experience to help employers make the most of the paycard opportunity.

"We find that if a company just lists paycards as an option, it's not enough for employees to flock to it," explained Wisdom. "Companies that spend just a little time explaining the benefits of paycards quickly see very good traction."

Ceridian provides employers with a full roll-out kit, including a video that explains what a paycard is and how to use it, sample letters to employees, lunchroom posters, even scripts that will help a benefits professional explain the program to employees and help generate maximum understanding and enthusiasm.

Talk to your Ceridian representative to discuss adding Ceridian PayCard to your payment solution program.

Sources:

1. Payroll Cards: A Direct Deposit Solution for the Unbanked, Celent Communications, December 2002.