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Why Payroll Cards Are Worth Celebrating


September 1-5 was National Payroll Week in the United States—a whole week dedicated to recognizing wage earners and payroll professionals. Though this week

recognizes all the business benefits of a quality payroll system, recent research shows that electronic payroll and paycards are often in the spotlight among employers. Nearly 97 percent of employees are paid electronically, according to the 2014 “Getting Paid in America” study.

 Here are a few reasons to recognize the impact of paycards for both employers and employees:

  • Taking sick time or vacation days may prevent employees from collecting their checks at the office, and severe weather may inhibit check delivery by mail. Payroll cards help ensure safe and prompt delivery of wages via direct deposit when employees might not otherwise be able to get a paper check.
  • Using payroll cards can help both employers and employees save money. According to the Aite Group, businesses save an average of $2.75 every time they electronically deposit funds to a payroll card or checking account in lieu of using a paper check. A 2010 study by the Massachusetts Division of Banks found an unbanked employee (defined by the FDIC as those persons who have not had a checking and/or a savings account in the past 12 months) earning $26,000 a year would spend about $750, or 2.8 percent of his or her annual earnings, in check cashing and money order fees to pay their bills, a cost that may be reduced by using a payroll card.[1]

While payroll cards are often convenient for many consumers, they carry a high level of regulation under both federal and state laws, which can be burdensome to employers. Federal Regulation E mandates that financial institutions issuing payroll cards must provide employees with disclosures of the card’s terms and conditions, prohibits employers from requiring employees to use payroll cards and requires employers offer another payment option. State law determines whether paper paychecks are required—many states require employees to be able to access their full pay at least once per pay period without charge.

As an employer, if you choose to offer payroll cards to your employees, it’s important to be able to extend that offer while also staying compliant with federal and state regulations. Click here to learn more about electronic wage payment solutions from ADP.



[1] 2010 REPORT ON CHECK CASHER AND BASIC BANKING FEES, Massachusetts Division of Banks, pg. 4 Table Two


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