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4 Rumors About Paycards You Shouldn’t Believe

4 Rumors About Paycards You Shouldn't Believe

There's a lot of confusion swirling around paycards. Here are 4 rumors you may have heard about paycards that you shouldn’t believe.

4 Rumors About Paycards You Shouldn’t Believe

Everybody loves payday, there’s no question about it. Traditionally, an employee would just cash or deposit a check to pay bills and make purchases, but today’s technology has revolutionized banking. We now access our money instantaneously through direct deposit and mobile banking. Some people even opt to have their paychecks paid to them via paycards, a method many people may not understand entirely. Here are 4 rumors you may have heard about paycards that you shouldn’t believe:

Rumor #1: We Heard Paycards are not secure


Paycards are just as safe and secure as debit cards; in fact, they can even be used in the same manner as debit cards. Employers can directly deposit an employee’s paycheck onto the paycard, just like a debit card. Paycards can also be insured by the Federal Deposit Insurance Corporation (FDIC). Many paycard programs include fraud protection, dispute resolution procedures, and purchase protection plans.

Paycard Security Note

Look for a paycard that offers a liability policy that protects users against unauthorized purchases in the event of a lost or stolen card. Employees want peace of mind that their money is secure and protected.

Rumor #2: We Heard Paycards Are Hard To Implement


According to a recent Visa study conducted by Ipsos Loyalty, 82% of employees said working for a company that offers a paycard is a major benefit73% stated when looking for their next job, they would look for an employer that offers a paycard. With more and more employees wanting paycard options, it’s time for employers to consider implementing paycards. Paycards essentially function like direct deposit, which means an employer could run payroll remotely, after hours, or during an emergency. Employers can also make corrections to paychecks and make employee reimbursements through their paycard, just like with any other traditional wage payment option.

The key is to have a strategy when implementing paycards for 100% paperless payroll:

  1. Determine if your organization will make paperless payroll enrollment mandated or voluntary.
  2. Communicate with employees using different channels and methods to ensure everyone is in the loop.
  3. Include your managers in the strategy so they can help reinforce the benefits and help distribute information.

Paycard Implementation Note

Communication is vital when implementing a paperless payroll strategy that includes paycards. Include information in new hire packets, post flyers in break rooms and common areas, as well as email employees to ensure everyone is informed.

Rumor #3: We Heard Paycards Have Expensive Fees


Fees associated with paycards are usually smaller than those associated with check-cashing services. Paycard providers typically have inexpensive card fees due to federal and state regulations designed to minimize or completely eliminate fees that would fall to employees. Some of these regulations require employee wages to be paid in full without being charged fees every pay period, hence why there are great efforts taken to ensure paycard fees are inexpensive or nonexistent. An employer should always review with their employees’ cardholder disclosures, agreements, and fee schedules if they decide to offer paycards as a payment option.

There are also other cost savings involved with paycards. Employers can reduce their bottom line on expenses associated with paper checks, postage, reconciliation, or replacement of lost checks.

Paycard Fees Note

When using paycards to make ATM withdrawals, many card issuers have agreements with ATM networks to prevent surcharges; however, if an employee uses an ATM outside the paycard issuer’s ATM network, there may be other fees involved. Check to see if the card issuer has a mobile app or ATM navigator so employees can identify for themselves which ATMs are within their network to avoid fees whenever possible.

Rumor #4: We Heard Paycards Require a Bank Account


Employees who do not have bank accounts can still be paid via paycard – no bank account necessary. Employees can be automatically enrolled in a paycard program should they volunteer to do so, and if the company offers paycards as a payment option. However, another option for employees with bank accounts is to split pay into both a bank account and a paycard; this option is popular with people who like to set aside a portion of their wages for vacation spending money or for holiday shopping. Employees can also use paycards to pay for groceries, pull cash from ATMs, check balances, review transactions, set up automatic bill pay, etc – just like a debit or credit card.

Paycard Compliance Note

Employers should check with their paycard provider to see if there are any restrictions on certain types of purchases and inform employees of those restrictions. Each state may have stipulations regarding paycard enrollment, so employers need to check state compliance laws to ensure they are following their state’s regulations.

Why Should You Offer Paycards?

Several employers opt to use paycards in an effort to transition to 100 percent paperless payroll company-wide. When companies make the full transition to paperless payroll, they can:

  • Reduce payroll costs.
  • Eliminate check-cashing fees.
  • Increase efficiency.
  • Ensure payroll runs in the event of an emergency.

Paycards are a topic employers should be aware of and discuss with their employees if the employer is serious about running paperless payroll. After all, it’s estimated that 12.2 million workers will expect their wages to be paid via paycards by 2019. Nearly half of all fifty states have approved paycard usage through legislation and/or regulations, so they are a viable and legitimate option for employers. If your organization is interested in offering paycards to your employees, be sure to be candid and transparent about the options available and above all else – do your research!

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