Five Things Employers Should Know About Pay Cards and Direct Deposit

Many of our payroll clients use direct deposit and debit cards to pay their employees. These methods provide companies with a convenient way to pay that not only saves paper but can also potentially be less expensive for both employees and employers.

Here are some things you should know when implementing a pay card and direct deposit program, and why it can make sense for your organization.

1. Benefits for Employees:

• Immediate access to their pay on payday without having to go elsewhere to cash a check
• Keeping wages in a bank account or on a pay card is safer than carrying around cash
• Employees can access their pay stubs and other wage information through Mize Houser’s online employee portal, thereby saving paper
• Check cashing fees can be expensive while direct deposit and pay cards incur little or no fees
• Paycards can be used wherever Visa and MasterCard are accepted
• Cash can be obtained through the appropriate ATM network
• Online and 800# access to account information 24/7
• Lost or stolen cards can be replaced with a small fee

2. Benefits for employers:

• Reduced or eliminated costs for printing pay stubs and checks
• Minimizes unclaimed property reporting for checks that aren’t picked up
• Saves time for your office staff since they don’t have to hand out checks
• Employees can run their own wage histories online through Mize Houser’s employee portal application, which also saves time for your office staff

3. Know what wage payment methods your state allows. Every state is different, and not all states mention electronic pay methods in their statute. Where there is a specific statute, most indicate that the employee’s written consent is required in order to pay by direct deposit or pay card. That means the employer can’t mandate direct deposit for all employees, but will need a signed agreement by the employee. Also, in many states, the employee must be able to access their pay without incurring fees. And other states require that if an employee opts for a paper check, the employer must allow it. So before implementing your program, know the rules for all the states in which you do business.

4. Pay card programs are offered by a variety of vendors, and programs vary. Pay attention to features and benefits of each program – it pays to comparison shop to ensure you have the right program for your employees.

5. Know what’s being communicated to your employees at orientation. Be sure your the members of your staff who conduct new employee orientation understand the rules and options available to your employees. It doesn’t do any good for the business owner to understand the rules if the right information doesn’t make it to the new team member.

We think it makes a lot of sense to implement electronic pay programs in your organization, and as long as you pay attention to these details, you’ll be glad you did!
If you have further questions, please contact your Mize Houser relationship manager or payroll processor.