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Payroll cards typically offer ATM withdrawals and Point-of-Sale purchases (where a merchant has a PIN pad at the checkout counter). You simply swipe your card and enter your PIN number to complete your transaction. Some cards also offer the ability to get cash back along with your purchase – a common option that you’ve seen at most grocery stores.
Cards that are “branded” – and look like a Visa Card or MasterCard – allow you to sign for purchases anywhere the brand is accepted. With this version of the payroll card, the dollar amount of the purchase is authorized and the transaction is completed when you sign the receipt. You may also use a payroll card to make catalogue and online purchases.
Once you receive your payroll card, you keep it for as long as you work for your employer. Each pay period your balance is increased by the amount of your net pay. In most cases, payroll cards require neither a bank account nor a bank relationship.
Periodic statement shows you what you spent
As a payroll card holder, you receive a periodic activity statement from the card issuer – not your employer. This protects your privacy and helps maintain the confidentiality of your purchase habits. The cardholder statement reflects your card’s activity for the prior period – including payroll deposits, ATM transactions, and point-of-sale and signature-based transactions. (Your payroll card statement is in addition to your detailed pay statement that all employees receive on payday.)
With its cost- and time-saving features, convenience and security benefits, one thing is for sure. The payroll card is an attractive, new way to get paid – and it’s here to stay.
Employer Goals in Offering Payroll Cards
- Cost Savings
- Increase direct deposit participation
- Reduce off-cycle/manual checks
- Reduce check reconciliation & escheatment
- Reduce check fraud
- Improve EE Service
- More reliable, lower cost payment method
Value Proposition to the Employee
- Reduce check cashing fees
- More reliable delivery of payment (get paid on vacation)
- Bank account with no credit check / min bal
- Safer than carrying lots of cash around
- No waiting in line to cash your check
- Receive your pay one day early
- Emergency pay (esp. temp-staffing industry)
- Low cost transfer of money to relatives back home
Additional Value Proposition to Employee– Branded Card
- “Pure benefit” for recruiting/retention
- Ownership is a status symbol
- Offer discounts to employees thru Visa’s merchant network
- Employee can establish credit
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