Payroll Cards: Challenges & Implementation

Payroll Cards: Challenges & Implementation covers reasons for employers to develop a payroll card program, the various mixes of payroll card solutions that are available, and implementation and compliance issues. A state chart developed using the Payroll Library State Chart Builder is also included as a reference.

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Payroll cards, also known as pay cards, prepaid cash cards, or stored-value cards, enable employers to pay employees electronically, much like direct deposit, but without employees being required to maintain a bank account. This service can be most helpful to employees who do not have a bank account but still want the convenience of accessing wages electronically. Wages are loaded onto a plastic card rather than deposited into a personal checking or savings account, and employees can use the card to access money at ATMs. According to a report from the research firm Aite Group LLC, the number of active payroll cards increased to 4.6 million in 2012 from 3.1 million in 2010.

In addition to using payroll cards for normal cycle payrolls, employers can use the cards to:

  • Pay employees who do not have personal bank accounts;
  • Make immediate payments to employees who are terminated (reducing overnight mailing costs, which is especially effective regarding employees in states where certain payments are required within 24 hours of termination);
  • Pay employees when off-site locations do not receive the payroll because of delivery problems;
  • Make payments to employees who are shorted pay during the regular payroll, initial roll out for a new payroll system, or initial payroll of an acquisition;
  • Pay employees who are working overseas with funds they can access through their local currency;
  • Pay employees through payroll for expense account reimbursements.

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