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Maximizing Benefits and Reducing Fees: How to Choose the Right Paycard

As more and more companies ditch paper payroll processes and switch to electronic methods, many are adopting paycards as another form of paying employees’ wages. But are there different paycard options companies can choose? Are some paycards more beneficial for employees than others?

Overall, paycards can help substantially reduce or even virtually eliminate fees employees might incur when cashing checks and purchasing money orders or cashier’s checks to pay monthly bills. According to the American Payroll Association (APA), a good paycard program is generally less expensive than a paper check for unbanked employees, but the trick is choosing a program that is flexible with limited fees.calculator-post

It turns out there are some very important distinctions employers should be aware of when choosing a paycard. Paycard vendors offer different programs with different types of fees, all of which can be crucial in determining the success paycards may have with a company’s employees.

The APA claims that while there are some fees generally associated with paycards, many can be avoided. With this in mind, employers should feel more comfortable negotiating a paycard’s fee structure with vendors.

Employers should search for programs that offer a large network of surcharge-free ATMs in order to help reduce or eliminate any fees employees might face when using the card to withdraw cash. These types of convenience or customer service fees are common but can be reduced or avoided by choosing the right program.

Generally speaking, employers should consider avoiding programs that make it difficult to manage the paycard or minimize its fees, according to the APA. Employers should also consider staying away from programs that charge a user each time for checking the card balance or that charge inactivity fees while a card is still receiving wages. Programs with petty fees like these are much less common today but do still exist.

Employers should also seek programs that comply with wage and hour laws within each state of operation. These laws can ultimately affect the fees that employees can be charged when using a payroll card, as well as the employer’s responsibilities with respect to offering paycards to employees and managing the paycard program.

Once a company decides on a paycard program, it is important to analyze the contract with the vendor, which should outline all fees and state that fees charged to the employer and employees cannot increase or be added unless they comply with applicable law, including providing reasonable advance notification. Employers also should be upfront and transparent with their employees about any fees that users might incur, and schedule training sessions as needed with employees to help them utilize all of the benefits their program has to offer.

 

 



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