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The Evolution of Payments: Where We’ve Been, Where We Are and Where We’re Going

EvolutionThe way we make and receive payments has changed over the course of human history and continues to evolve. If you want to get a snapshot of that evolution, take a look at your own life history as an example. One of the first payment methods was in the form of bartering, a practice you’re most likely familiar with from the school lunch table, where you traded your cookies for your friend’s PB&J. Next were coins and currency. An example would be receiving cash for a paper route. Then came paper checks, which is most likely how many people were paid at their first job – with a perforated edge and all.

And now we live in the electronic payments age.  Rather than exchange cash, we’re more likely to “Venmo” or PayPal money to our friends and receive our wages directly deposited to our bank accounts. Most of the time, we may not even see our paystubs unless we actively look for them. So what’s next in the evolution of payments? Will we be using Bitcoins to pay for our morning coffee? Will paper paychecks become a relic of that past in the way the rotary phone did?

It does appear that a new era of payments has arrived: the payroll card era. A recent Visa survey[i] illustrates employees’ preferences for payroll cards.  Eighty-six percent of respondents say they prefer to be paid via payroll card rather than a paper check (when given the choice between a payroll card or paycheck only). Furthermore, 80 percent of respondents who have a preference say they would want to continue receiving their wages on a payroll card if they were to switch jobs.

Some key consumer trends paving the way for this type of payment system are the rise in social media and mobile, and consumers’ demands for ease of use and immediacy. Specifically, payroll cards help employees save time and can serve as a more convenient alternative to cashing paper checks, help provide employees with faster access to their funds to pay monthly bills, and help employees track their personal finances. Eighty-seven percent of payroll cardholders responding to the Visa survey say that a payroll card saves time paying bills versus having to cash a check or buy a money order, and 85 percent of respondents agree that their payroll card is easy to use for all their monthly purchases. Lastly, 81 percent of respondents believe that their payroll card helps them track their money better than cash.

So we went from bartering, to currency, to paper checks and electronic payments. What does the future hold in store? While nothing is certain, one thing is clear: electronic payments will likely continue to evolve, and the cloud will be key to their future. Next generation cloud-based electronic payment systems now allow employees in the service industry, for example, to receive tips and commissions deposited directly to their payroll cards. Solutions such as this have benefits for both employers and employees: they help simplify payroll processes for companies while also helping to provide employees with faster access to their wages and tips.

By helping to maximize efficiency, improve access and drive better customer experiences, cloud-based solutions represent the next step in the evolution of payments. Whether for better data gathering, tax assessments or wage garnishment capabilities, we’ll likely continue to see more cloud-based HCM solutions being offered to companies.



The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice.  The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

[i] Survey results based on an online survey by Ipsos as a commissioned agent of Visa, among active cardholders of four Visa payroll partners; data weighted to each partner’s respective share of over half of Visa’s payroll card POS dollar volume from October 2013 – September 2014.


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