What is a Payroll Card and How Does it Work
What is a Payroll Card?
Ever asked yourself what is a payroll card and how does it differ from other debit card options? It can best be described as a type of prepaid card for business, solely used for the purpose of paying, not only employees, but contractors as well.
The employer pays the employee by crediting their unique prepaid payroll cards, which in turn work like standard debit or prepaid cards. However, the user does not need to have a bank account to use their payroll card, and a fee to access money is not required.
How do Payroll Cards work?
A payroll card is basically a prepaid card for business, which is used to pay employees and/or contractors. After the employer transfers the employee’s salary or a payment to any contractor, the funds become available. This then allows the card to be used in the same manner as any other prepaid or debit card. This means that the user can withdraw money from ATM’s and can use the card to purchase products and services from any business that accepts card payments, both online and in-store.
The major difference between a standard debit or prepaid card and a payroll card is that the user is not required to have a bank account of any sort. The cardholder can also use the online portal which usually accompanies such a service. This affords the cardholder the opportunity to view their prepaid payroll card’s balance, transaction history, PIN notification and other analytical tools that track spending and enable easier management of one’s funds.
Prepaid Payroll Cards - Pros and Cons
There are several advantages and disadvantages in using prepaid cards for business, and subsequently prepaid payroll cards. The main payroll card pros and cons are identified and discussed below:
- The cardholder is not required to have access to a bank or bank account to gain access to their money. This helps employees who don’t have a bank account to withdraw their money.
- Prepaid payroll cards are a less costly payroll solution for the employer, in comparison to acquiring cheques to issue payments.
- The cards can be used anywhere where card payments are accepted; the cardholder can withdraw funds from ATM’s and purchase products and services online or in-store.
- Prepaid payroll cards present a secure salary payment solution, having the same security features of any standard card, including Chip and PIN. This means that the card can be rendered void in case of theft and/or loss, ensuring the cardholder does not lose their funds.
- An online cardholder portal can be used by the cardholders to view their balance, transaction history, PIN notification and much more.
- The employer / business can schedule thousands of payments, or just a single one at any time. These payments happen in real time, with no delay in transferring the funds, making it an excellent tool to ensure correct and timely distribution of payments.
- The personalised prepaid payroll cards further contribute to the decreasing use of resources such as paper and administrative time needed for issuing cheques. Additionally, providing a cashless solution for payments to both employees and contractors.
- Most prepaid payroll cards for business have a monthly maintenance fee, usually paid by the business or employer. However, this depends on the payroll model that a business wishes to use.
- Certain ATM’s may limit the amount of money that can be withdrawn, thus imposing limits on the cardholder’s use of their funds.
- In case of theft or loss, some delays may be expected in replacing the lost card.
- A prepaid payroll card may not be connected to a bank account. Therefore, it may not possess an IBAN number of its own. This would prevent the cardholders from topping up their own card, only allowing for the acceptance of the corporate loads only, such as salary payments, bonuses etc.
Powercash21 offers prepaid payroll cards solutions for your business
By now you’ll hopefully have a clear answer to the question “What is a Payroll Card and How Does it Work?”, and you should be aware of their benefits to you, your business, your employees, and any contractors.
Powercash21 is here to help. We offer prepaid payroll cards to businesses that ensure convenience, accurate payments in a timely fashion, and decreased costs in terms of administrative time, cheque issuing and wire transfer fees.
We make sure that our prepaid payroll card solutions are tailored to the specific needs of your business, thus providing your employees and/or contractors with a convenient, cashless and secure access to their payment.
Contact us here and find out how our prepaid payroll cards can reduce the costs of your payroll, increase employee satisfaction and ensure a simple, effective payroll, regardless of the type of your business model.