| |
Payroll
cards offer convenience at lower cost | | |
|
"At the highest level, payroll cards allow companies
to deliver more choices to employees while still reducing their
cost," says Matt Gillen, chief executive of eCount, a Conshohocken,
Pa., payment-processing company.
"Payroll cards give employees the convenience of direct
deposit while having choices as to how to access their pay. It's
the best of all worlds for all parties."
The allure of payroll cards for employers is that they can significantly
cut their costs.
According to a report by the U.S. Comptroller of the
Currency, direct deposit to a bank account costs employers about
20 cents per transaction, while the processing cost of paychecks
ranges from $1 to $2 for each check.
In contrast, the cost of posting to a payroll card
falls somewhere between the two. Add in the fact that payroll cards
eliminate the recurring cost of paper for checks, envelopes and
postage, not to mention the cost of replacing lost paychecks cited
above, and it's easy to see why employers like payroll cards.
A
real-world scenario
Stein Mart, a retailer headquartered in Jacksonville, Fla., converted
to payroll cards in early 2005. The majority of the company's stores
are located in the southern tier of the United States, but it has
locations as far north as Wisconsin, Michigan and New York. The
company used to cut payroll checks in Jacksonville and ship them
to its stores around the country via UPS, but a series of events
prompted the company to look for a better way, says Hunt Hawkins,
executive vice president of operations.
"Our decision was driven by the fact that on multiple
occasions, beginning with 9/11, we had problems getting paychecks
to our associates," Hawkins says. When the government closed U.S.
air space immediately after the terrorist attacks in New York and
Washington, barring all but the military from flying, the company
"had to scramble to set up a pretty unsecure cash payroll system,"
Hawkins says. "We were centralized and had backup for the generation
of checks, but not for distribution. Then, about a year later, a
freak snowstorm resulted in the checks being caught in UPS' hubs."
The company went searching for another method of payroll
distribution and ultimately selected a program from eCount. The
program saves Stein Mart about $100,000 in payroll costs, says Hawkins.
There are many payroll-card issuers in the market,
ranging from large banks such as J.P. Morgan Chase, directly from
MasterCard and Visa, or from payroll processing companies such as
Automated Data Processing, Ceridian and eCount, all of which can
help companies navigate the sometimes complex regulations governing
the use of payroll cards.
|
