The American Banking Association estimates that employers will save up to $1.90 for each direct deposit Vs. a paper, check written and hand delivered to the employee. A savings of $10.00 per paper check lost and replaced will accrue if direct deposit is used.
The Wall Street Journal reports that U-Haul International, Inc. was paying between $1.00 and $2.00 per employee to write checks for each payroll period and distribute the checks to outlets all across the nation. U-Haul went to a prepaid card for payroll deposits and reduced its payroll per transaction cost to 25 cents per employee for the electronic transfer. The transfer occurs quickly – no waiting for the mail for remote employees.
Benefits are even greater for variable 1099 payments to contractors and “un-banked” employees. The “un-banked” employees pay an average of 8% of their check amount to have it cashed at check cashing outlets. The Employer and its employees would both benefit from prepaid Pay Transfer Cards. iCard Services recommends Visa as the card of choice because of its pristine image and universal acceptance.
The Employer will see immediate and substantial savings by switching from their current process to the iCard Services PayCard program. The Employer prepaid VISA card enables the Employer to earn income on their employee’s use of the prepaid VISA card. For such fees as ATM withdrawal, card-to-card transfer, or even use at point-of-sale, the Employer will earn a “split” of the fees that would normally go to a bank. This can mean as much as $10 a month per employee depending on usage, a way to earn back a portion of the monthly payroll taxes.
The Employee will see huge benefits. Avoiding check-cashing services may save over $100 each month for an “un-banked” employee. These same employees will pay $15 to $75 each month for money orders to make rent, utility, and car payments. Using the branded payroll VISA accounts enables the card-issuing bank to make automatic bill payments for the employees. Employees may also receive other payments, such as child support and emergency funds deposited onto these cards. Many employees need to send money to distant relatives; the Employee branded payroll VISA cards enable very low cost card to card and cross border money transfers. Some employees may want to start a tax-deferred Health Savings Account (HSA); the Employee branded payroll VISA cards allow HSA savings accounts with payments made to medical providers via the Employee branded payroll VISA card. Parents can get an additional card issued to their children to be used as a student card. Lastly, employees under the age of 18 can have an Employee branded payroll VISA card for direct payroll deposit by using this same student card feature. |
