More Employer’s Using Payroll Cards
As long as one can remember, employers have paid their employees in two ways: either with cash or with paychecks. Until recently when employer’s started offering direct deposit.
Emloyer’s now are also adopting a new way to pay, using payroll cards. Instead of issuing a check or cash, the employer deposits a worker’s earnings into an account it establishes tied to a payroll card, which is basially a type of debit card that can be used at an ATM to withdraw cash or at any merchant that accepts debit cards for purchases. The result is that employers can eliminate the cost of checks, and workers, especially those who don’t have bank accounts, have the convenience and safety of debit cards.
According to Visa USA, Americans without bank accounts spend about $8 billion annually in check-cashing fees. Plus, if the card is lost or stolen it can be more easily replaced than a check and at lower cost to the issuer. Visa estimates that 4 million checks are lost or stolen each year and generating a replacement costs employers an average of $8 to $10 per check.
I find this very interesting because the cost of direct deposit is just as inexpensive as the payroll cards. The only benefit is for those who don’t have a banking account. For those I can see the purpose behind it. It will be interesting to see if more employer’s start using this method to cut costs.