Paycards’ popularity continues to grow, with more companies adopting the method of pay each month. Paycards act like a debit card, with an employee’s net earnings being loaded onto it weekly, bi-weekly, semi-monthly, or monthly. But with something novel like this comes resistance - sometimes in the form of rumors, or myths. We’re here to bust them.
Rumor #1: Paycards Have Too Many Fees
While there are some fees associated with paycards, they are not as high as some believe. Usually, the program itself is free. Paycards don’t require a bank account - so the process of cashing checks, which comes with a fee, is gone. Some paycards have an overdraft option, which charges users every time they go over their balances. However, this is an option that users must opt into. Every paycard has some method to check the balance for free, typically through an online portal.
Rumor #2: Paycards Only Have One Feature
The main purpose of a paycard is to use it exactly as one would use money out of a checking account. Some providers offer additional services with their paycards, such as:
- Online and automatic bill payments
- Free 'balance portals' accessible through text or email
- Low-cost checks or money orders
Rumor #3: Paper Checks Are Easier
For some employees, paper checks have always been simple and the preferred method. However, issues arise with paper checks. Managers being too busy to print them, losing them, or late delivery are examples of problems employees face with traditional checks. Employers load paycards online early in the morning on payday, making the funds available by the time employees get in for the day. From there, it’s as simple as going to an ATM or paying a bill online. With paycards part-time employees have an added benefit - don’t have to go into the office to receive their paychecks on their days off. Advantages for employers specifically include:
- No 'stop payment' fees for lost or stolen checks
- No final wage payments for terminated employees
- Decreased costs of producing paper checks.
Rumor #4: Paycards Are Not Secure
Most paycards are either insured by the Federal Deposit Insurance Corporation (FDIC) or backed by zero-liability protection plans through Visa or MasterCard. If a paycard is lost or stolen, the money will be returned under the protection of the backer or insurer.
Does your company use paycards? Let us know on PayrollTalk!