What Do You Need? A Payroll Card Program or a Debit Card?

Adam Rust

Is a payroll card the right solution for your company? The answer depends on your needs. If you have a lot of unbanked employees, then it could be a good fit. But if you only have a few, you are probably better off asking them to find a debit card on their own. Why? Because while a payroll card program can save a lot of time with onboarding a worker to direct deposit, the startup process takes more time and may come with fees.

Payroll Cards

Payroll cards require more work up front, but going forward, they expedite the process of signing up an employee for a bank account. Typically, payroll card companies require a business to sign a contract. Sometimes, they charge an upfront fee. In general, the cost of time outweighs the set-up fee expense, which tends to be less than $100.

Two things make a payroll card work so well. First, you can complete all of the steps necessary to set a worker up with direct deposit

Prepaid debit cards

With a prepaid debit card, the employer does nothing. All of the steps are completed by the employee.

However, the virtue of such a hands-off approach is also its shortcoming. Because the work is left up to the worker, the employer doesn’t have any control. Going from check to direct deposit will depend upon the follow-through of the employee. While the process of sign-up can occur at a computer inside the payroll office, the employee must activate the card. That won’t happen until the card comes in the mail. At the minimum, it will take three days for the new card to arrive. Once the worker activates, then there is still one more step. The worker has to return to the payroll office with the routing number of the card account’s issuing bank and the account number associated with the individual account.

For companies without a lot of unbanked employees, starting a payroll card program could be more work than it is worth. Most likely, those firms will want to make better use of their time. They may prefer just to use WiseWage's prepaid debit card solution.  

By contrast, once a company has a payroll card program in place, the process can be completed in one sitting. The employer “holds the cards.” Literally. Payroll card companies provide their partner businesses with a sheet of ready-to-use plastic cards. These “plastics,” as they are known, already have an account number. They can receive a direct deposit today. There is no gap between sign-up and receipt of the direct deposit.

Because it does take some effort to start with a new payroll card plan, we think it is a better solution for businesses that expect to have a lot of unbanked employees. At the very least, a company should expect to need at least five account sign-ups before they consider using a payroll card. Otherwise, using a payroll card will amount to a lot of work for not a lot of time savings

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