As technology improves, our methods for processing payroll evolve along with it. For example, the way we transmit payroll becomes more efficient. Additionally, we develop more options for paying employees. Hence, we are no longer confined to the paper check and hand-written general ledger of the past. In other words, we have computers to handle all that for us! So, if you haven’t explored alternatives to checks or direct deposit, here is your chance. Introducing the pay card.
Ok, so what are pay cards? Well, read on to gain a little insight about the past methods of transferring money, as well as the five reasons why pay cards could be a great way to pay your employees.
Fix It Anyway
Now, many of us operate with the mindset, “If it ain’t broke, don’t fix it.” While I don’t completely disagree with that philosophy, I do believe that change is good, when done properly. To this point, we should take a look at the ways payment methods have changed over the years. Then, we will learn more about pay cards.
Cashless to … Cashless?
In the distant past, the world operated as a cashless society. This means that paper bills weren’t yet passing hands. Rather, people bartered, exchanged services, or gave valuable metals or jewels in return for services or goods. Thereafter, we can find timelines of how people compensated one another:
450 BC – Metal coins introduced as currency
1681 – First check used as payment
1775 – Paper money printed as currency
1941 – Western Union issued the first charge card
1958 – Bank of America developed the first credit card
1978 – Seattle’s First National Bank offered the first debit card
2003 – First smartphone payments accepted
But What About Payroll?
Now, you are probably looking at that list and wondering what it has to do with payroll. After all, those are methods of paying for goods or services. Still, if you think about it, payroll is essentially an employer paying for the labor and services an employee provides. Therefore, we should be asking ourselves why we tend to resort to so few methods for paying employees. Or, at least why many employers are so resistant to offering multiple payment methods to their employees, including pay cards.
The Con of the Pay Card
When it comes down to it, the answer to that question is largely a matter of cost. Many employers associate multiple payment methods with additional fees. Other than the fear of added costs, there really aren’t serious cons associated with giving employees a variety of options for receiving their paychecks. Furthermore, the potential fees of pay cards are fairly minimal when compared with the benefit and convenience pay cards offer.
The Pros of Pay Cards
As you can see, there are actually few drawbacks when offering pay cards to your employees. So, let’s go ahead and identify some of the reasons why offering payroll pay cards is a good idea.
1: No Need for a Bank Account
First of all, it’s important to clarify that pay cards are simply an alternative to employees receiving a paper check or direct deposit into their bank. In fact, some employers might not realize that a portion of their employees don’t actually have a bank account. Some of the reasons why employees don’t have a bank account include distrust of banks, past banking problems, or because they don’t think they have enough money to keep in an account. So, a pay card is a great way for an employee to feel empowered receiving his net pay without going to a bank to cash a check make a withdrawal.
2: Immediate Access to Funds
Second of all, with these same people in mind who don’t have a bank account, the pay card gives them the ability to swipe at a POS, make purchases and pay bills online, or withdraw from an ATM. Furthermore, they can make a transaction on the day that the funds are posted to their account, so they aren’t bound by the bank’s business hours or holds on checks.
3: Pseudo-Savings Account
Third of all, not everyone uses a pay card because they don’t have a bank account. In fact, some people use pay cards in addition to their bank account, because it acts almost like a savings account set aside for special occasions, like Christmas gifts or vacations. People who do this claim that they can almost forget the money is there, because it’s out of sight and out of mind. However, when the time comes to spend the money, it’s readily available. Though, it is important to mention that the funds on a pay card will not gain interest.
4: Flexible Account Distribution
Fourth of all, the funds can be dispersed among different accounts. So, if an employee wants to break the net pay into a checking account and a pay card, it’s absolutely doable. This makes it even more appealing to use the pay card as a pseudo-savings account.
5: Socially Responsible
Last of all, pay cards are just plain good for the environment. Think about everything that goes into printing checks. Now, think about pay cards. In case you haven’t made the connection, they eliminate the need for paper, ink, electricity, and shipping costs. So, if nothing else, your company can feel good about checking that social responsibility box.
Welcome to the Future with Pay Cards
Now that you are wrapping your mind around the idea of offering pay cards to your employees, you probably feel like you are turning futuristic. Well, buckle up because pay cards are only the tip of the iceberg, my friend! Nevertheless, it’s good to acclimate, so if you are going to test the waters with anything, pay cards are a tried-and-true way to go.
On the other hand, if you are anxious about offering them, just keep in mind all the benefits. Hopefully it is evident that the pros of offering pay cards to your employees truly outweigh the cons.