Payroll cards for employees - Benefits, types, and how to apply?
Decades ago salaries were given to employees of a company through cash. Over time, crediting an employee’s salary has shifted from hard cash to other methods like giving cheques or making direct bank transfers. Nowadays, a new way in which an employer can provide their employees instant access to their salary is through payroll cards.
Payroll cards for employees have become popular amongst businesses for a few reasons. These cards make it extremely easy for an employer to transfer money without any roadblocks or hassle and the employee also gets instant access to the money through these cards.
What is a payroll card?
A payroll card is a type of debit card that is given by an employer to an employee. These cards are linked to the employee's payroll account. It lets employees access their salary without having to cash a physical paycheck or have a traditional bank account.
The funds are electronically deposited onto the card every salary cycle and employees can use the card to make purchases or withdraw cash at ATMs. The best payroll cards for employees also let you easily track and manage expenses.
What are the different types of payroll cards for employees?
1. Branded payroll cards
These cards are typically issued by banks and come with the employer's branding. Employees can use these cards anywhere that accepts the card's payment network, such as Mastercard or Visa. These branded cards are not transferable in case you switch jobs.
2. Personalized cards
These cards have the employee's name on them and may offer additional features such as cashback rewards or discounts. Personalized payroll cards are very similar to debit cards offered by banks.
If your employer's company name or logo is not on the card, these cards may be transferable to a new employee in case you decide to change jobs.
3. Instant issue cards
These payroll cards for employees are typically provided on the spot by the employer or a third-party vendor, allowing them to access their wages immediately.
4. Portable cards
These payroll cards can be used by employees even if they switch jobs. They can do this since the card is not tied to a particular employer.
Apart from this, all the functions of the payroll card remain the same as the other types.
In case you are switching jobs, you can ask your employer whether you continue using the same payroll card with your new employer or not. This will let you know whether you are using a portable payroll card.
How do payroll cards function?
Employee enrollment process
Employee enrollment process involves the completion of an application form and a verification process to ensure the accuracy of the provided information.
Once the application is approved, the card is sent to the employee. Card activation is the final part, ensuring the card is ready for use.
Adding funds to the payroll card
After activation, employees can start receiving their salaries directly onto the payroll card.
Employers transfer funds electronically to each employee's card, providing a quick and efficient way to distribute payments. This step eliminates the need for physical paychecks and the associated time delays.
Accessing the funds on payroll card
With funds loaded onto the payroll card, employees can access their money through various channels. This includes traditional methods such as ATMs or point-of-sale (POS) terminals.
The flexibility of access allows employees to manage their finances conveniently, whether it's withdrawing cash or making purchases.
Card usage and transactions
Just like a debit card, employees can use their payroll cards for everyday transactions, .
Whether it's buying groceries, paying bills online, or dining out, the payroll card functions seamlessly in a variety of situations.The card is equipped with security features to protect against unauthorized use, ensuring the safety of the employee's funds.
Reload and balance enquiry
In cases where employees need to add extra funds to their payroll cards, a reload option is available.
This can be done through various means, such as direct deposit or cash loading at designated locations.
Balance inquiries are easily accessible, allowing employees to stay informed about their financial status and transactions.
Additional features
Payroll cards often come with additional features to enhance the overall user experience.
Rewards and cashback programs provide incentives for card usage, encouraging responsible spending.
Mobile access and online portals allow employees to manage their accounts on the go, checking balances, reviewing transactions, and even receiving alerts for specific activities.
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Benefits of payroll cards for employees
1. Convenient access to wages
Payroll cards are extremely similar to a debit card and hence offer an easy way for employees to access their salary. They can use it in any accepted place to make purchases and also be used for online bill payments.
If you need cash, you can also use the payroll card to withdraw cash from ATMs.
2. Better finance management
Employees can track their expenses easily and set up alerts to receive notifications about deposits, withdrawals, and purchases. This helps employees stay on top of their personal finance and make better financial decisions.
Using your payroll account you can access and view all the transactions that you have made at any time.
3. Increased security
Payroll cards offer increased security and fraud protection compared to cash payments.
If the card is lost or stolen, it can be quickly replaced and funds can be protected with a PIN or other security features such as temporarily freezing the cards so payments cannot be made through it or permanently blocking it.
4. Access to budgeting tools
Some payroll cards for employees offer budgeting tools within their system. These help employees track expenses, set spending limits, and plan for future expenses.
It essentially makes managing your expenses easier through real-time visibility of your money.
5. Reward programs
Some payroll cards offer reward programs that allow employees to earn cashback or points on purchases, and discounts on certain products and services.
This helps them earn more or save money on expenses.
6. Increased financial inclusion
Payroll cards provide access to financial services for employees who may not have traditional banking options, which can help to promote financial inclusion.
This may include things like personal loans, housing loans, and/or different types of insurance that are affordable.
Benefits of payroll cards for employers
1. Cost efficiency
One of the primary benefits of payroll cards for employers is cost efficiency. The traditional methods of issuing paper checks or managing direct deposits can be resource-intensive and costly.
Payroll cards eliminate the need for paper, printing, and postage, reducing operational expenses associated with payroll processing. This cost-effective approach allows companies to allocate resources more strategically, contributing to overall financial savings.
2. Compliance and record-keeping
Payroll cards help employers uphold compliance with labor laws and regulations. The digital format of payroll card transactions simplifies the documentation of payment activities, facilitating companies in monitoring and recording financial transactions.
This not only guarantees adherence to legal standards but also streamlines the auditing process, minimizing the potential for errors and penalties related to non-compliance.
3. Positive company image
Adopting payroll cards demonstrates a progressive approach to payroll management, contributing to a positive company image.
Employees appreciate the convenience and flexibility offered by payroll cards, recognizing their employer's commitment to modern and efficient payment solutions.
This positive perception can enhance employee satisfaction and contribute to a more favorable corporate reputation.
4. Adaptability and modernization
Payroll cards reflect a company's willingness to adapt to modern financial technologies.
In an era where digital solutions are transforming various aspects of business operations, implementing payroll cards showcases a company's commitment to staying current and relevant.
This adaptability not only enhances the employee experience but also positions the company as forward-thinking and technologically savvy.
5. Streamlined process
The use of payroll cards streamlines the entire payroll process for employers. It simplifies the distribution of funds, eliminates the need for physical checks, and reduces the administrative burden associated with traditional payment methods.
This streamlined process not only saves time but also increases overall efficiency in payroll management.
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What are the limitations of payroll cards?
Fees associated with payroll cards
While payroll cards have similar capabilities to debit cards, they may come with extra costs.
Employees may be subject to fees for using the card, such as transaction fees or ATM fees. This might not be a big issue for some people. But it might affect those that tend to withdraw cash from ATMs quite often and those who have a high number of transactions to be made each month.
Limited acceptance
While most payroll cards have widely accepted payment networks as their partners for card acceptance, not all merchants accept payroll cards, which can limit where employees can use the card.
Issue in accessing the salary in case of the card getting lost or damaged
Since there is no bank account associated with the payroll card, the employee might face issues such as not being able to access their money until they get their new card.
This can cause liquidity problems for the employee rendering them unable to make purchases for some time.
How to introduce payroll cards into your organization?
1. Research and choose the right provider
Introducing payroll cards in an organization typically starts with conducting extensive research to identify a trustworthy provider that is well-suited to the organization's requirements.
It is essential to choose a provider that delivers comprehensive services, encompassing smooth payroll processing, user-friendly interfaces, and stringent security standards to protect sensitive financial data.
Opting for a provider with a proven history of reliability and positive client interactions is vital for the seamless integration of payroll cards.
2. Educate the management team and employees
Before implementation, it's imperative to educate both the management team and employees about the benefits and functionalities of payroll cards. This involves explaining the convenience, security features, and potential cost savings associated with this modern payment solution.
Addressing any concerns and fostering a clear understanding among stakeholders is vital for a smooth transition.
3. Develop a clear policy
A well-defined policy is crucial to the successful introduction of payroll cards. This policy should outline various aspects, including fees associated with the use of the cards, guidelines on usage, and security measures in place to protect both the organization and its employees.
Clearly communicating these details helps set expectations and ensures transparency in the adoption of payroll cards.
4. Enroll employees
The next step involves enrolling employees into the payroll card program. This process includes distributing information about the new payment method, providing enrollment forms, and guiding employees through the necessary steps to activate their cards.
Offering support during this phase helps alleviate any concerns and ensures a smooth onboarding experience for all employees.
5. Training sessions
Conducting training sessions is essential to familiarize employees with the features and functionalities of payroll cards.
Training should cover how to use the cards for transactions, access account information, and address any potential issues that may arise. This proactive approach enhances employee confidence in utilizing the new payment system effectively.
6. Regular evaluation
After the implementation of payroll cards, it's crucial to conduct regular evaluations to assess the program's effectiveness and employee satisfaction.
Collect feedback from employees to identify any challenges or areas for improvement. Continuous monitoring allows the organization to make necessary adjustments, ensuring that the payroll card system meets the evolving needs of both the company and its workforce.
How Volopay’s payroll module can benefit businesses?
Volopay is a complete expense management system for a business that also has a payroll module within the platform. While payroll cards are good, they do have their limitations and are not beneficial or applicable to all businesses.
Organizations that have employees across different geographic areas, especially those working remotely will not find using payroll cards a suitable option. For such businesses, a system like Volopay that has multicurrency capabilities and a payroll module through which you can transfer money domestically and internationally is much more ideal.
You can easily create employee accounts within the system so that you don’t have to manually enter their details each month to make salary payments. You can also schedule the salary payments monthly and ensure that the approvals go out to the approvers so that no one misses out on receiving their payments on time.
To maintain confidentiality and sensitive information about each employee’s salary, this feature is only available to the admins of the platform. The admin role can be set and given to individuals of your choice within the organization.
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FAQs on payroll cards
A payroll card is a type of debit card. When you use it to make payments through it, money is instantly debited or cut from your card balance.
Yes, almost all payroll cards allow their users to withdraw cash from an ATM. Depending on the card issuer and your company’s agreement with the provider, there might be charges applicable for withdrawing cash from an ATM.
A payroll card is as safe as any other debit or credit card when it comes to making payments online. You should ensure that you are using it on safe and secure sites so that your card details are not compromised.
The decision to use employee payroll cards depends on various factors such as the size and nature of your business, the preferences of your workforce, and your overall payroll management goals.
Payroll cards can offer cost efficiency, convenience, and modernization. Consider factors like the demographics of your employees and whether they have easy access to ATMs or retail locations for card usage.
Employees can use their payroll cards at various locations, including ATMs for cash withdrawals and point-of-sale (POS) terminals for purchases.
The acceptance of payroll cards is widespread, similar to traditional debit cards, enabling employees to make transactions wherever major card networks are accepted.
Online purchases and bill payments are also common uses for payroll cards.
Payroll cards typically have expiration dates, but it's essential to check with the specific provider for the details.
Expiration dates are often related to the physical card, and new cards are issued before the old ones expire to ensure continuous access to funds.
Ensure that employees are aware of expiration dates and the process for receiving replacement cards.
The option to move funds from a payroll card to a bank account is contingent on the policies or regulations set by the payroll card provider.
Generally, payroll cards are tailored for electronic transactions, and there might be restrictions or fees associated with direct transfers to bank accounts.
It is advisable to consult with the provider to explore potential avenues for transferring funds to a standard bank account and to ensure that employees are well informed about the various available transfer methods.