After a customer requested information from me on implementing Pay cards in Oracle Payroll, I decided to look into this process more closely. Looking at information on the American Payroll Association site, there is a paper (http://legacy.americanpayroll.org/pdfs/pt5f/f1005.PDF) that has the following information:
According to the APA’s online Paycard Portal, unbanked employees—individuals
with no formal banking relationship—represent approximately 10 million households in the United States. Consulting and research firm Celent Communications reports that 10% of unbanked households were using payroll debit cards at the end of 2002. Participation is expected to increase to 25% by the end of 2006. This projection represents a significant opportunity for companies wishing to go the paperless payroll route.
Given that this paper was presented in 2005, which was well before the current economic climate, it presents a sort of premonition of the increase in numbers of unbanked employees that companies could be serving.
According to Elaine Stattler in her article for Payroll Manager's Letter ( http://www.accessmylibrary.com/coms2/summary_0286-27773491_ITM ) there are several things that should be considered when implementing Paycards:
- State Laws regarding Paycards
- Costs
- Training (including training for non-English speaking employees)
- Initial Employee Resistance
Once all of those have been addressed, this is a seemingly good solution for those employees who want quicker access to their pay and do not want to have to arrange transportation so that they can stand in line just to pick up their check and then have to arrange to have that check cashed somehow.
I was wondering how many of you have Pay cards implemented and how it works out for you. What percentage of your population takes advantage of them? Have you seen any pros or cons that you would like to share?
Comments (1)
Karla,
Directo has 10 years of successful paycard program implementation with clients ranging from multinationals to the local landscaper. Paycards are best presented as an alternative to direct deposit for those that choose not to use a bank and employers are willing to make direct deposit a condition of employment. Although many states have paycard laws they are outdated and the real guidelines are around direct deposit, condition of employment and employee at will.
There is a lot of poor information provided by the "industry experts" based on promoting the capabilities of their paid advertisers. The real goal is to eliminate the cost and risk of paychecks while improving the unbanked workers life who is paying a check casher or payday lender.
Key components of a successful program:
- Direct Deposit as a condition of employment
- Paycard handed to the unbanked employee on day of hire (instant issue) also for lost or stolen cards.
- Ability to make the first pay available via direct deposit
- The account must be owned by the employee so they can take it with them if the leave.
- Account number for direct deposit is not the card number for security reasons.
- The paycard is not attached to another vendor relationship so it is not viewed as a conflict by employees or raise concerns with privacy of the account.
- Cost needs to be considered as it relates to behavior (number of transactions not the price of the transaction).
Jim McCarthy
www.directocard.com
jmccarthy@directo.net
Posted by Jim McCarthy | February 11, 2009 3:22 PM
Posted on February 11, 2009 15:22