5 Ways Employee Pay Cards Improve Financial Access and Flexibility

Given today’s workforce’s diverse needs and personal circumstances, traditional payment methods such as paper checks and direct bank deposits may not always be the most effective or beneficial. That’s why alternative payroll solutions like employee pay cards are gaining more traction.

In this article, we’ll examine the features of free pay cards for employees, explain how they function, and discuss the many benefits they offer the modern workforce.

What is an Employee Pay Card?

Payroll cards are a mechanism through which companies can pay their workers without issuing them paper checks or depositing wages into their bank accounts. Employee pay cards function like debit cards; they’re loaded with funds each pay period, and workers can use them to make purchases at any merchant that accepts debit cards. They can also withdraw cash at a bank, ATM, or other point-of-service location offering cash back (e.g., a grocery store). They can also use their card to shop online.

Some solutions allow employees to pay bills over the phone using their pay card or authorize electronic bill payments, such as rent or mobile phone payments.

What’s the Difference Between a Payroll Card and a Debit Card?

Although employee pay cards and debit cards are similar, there’s one key difference: Payroll cards aren’t linked to an employee’s bank account but operate via a separate account, usually offered by a third-party service provider.

5 Benefits of Employee Pay Cards for Your Workforce

1. Employee Pay Cards Offer Payroll Flexibility and Instant Access to Wages

In an era where digital payments are the norm, employee pay cards introduce a new level of payroll and financial flexibility. With a pay card, your workforce can request access to their earned pay based on the number of hours already worked, which frees them to spend the money they earn when they need to.

Enrolling in Payactiv allows employees to access up to 50% of their earned wages anytime. They can use the funds to pay for emergency car or home repairs or medical bills without using a credit card or seeking a short-term, high-interest loan.

2. No Need for a Traditional Bank Account

Employee pay cards improve access to finance for minority employees, who are more likely to face challenges with the traditional banking system. According to the Federal Reserve, today, around 14% of Black individuals and 11% of Hispanic individuals are unbanked, compared to just 4% of white individuals.

Offering pay cards to your workforce allows them to avoid fees and other issues related to being unbanked.

3. Employee Pay Cards Enhance Financial Inclusion

Because pay cards aren’t credit cards, workers don’t need a good credit score or any credit history at all to receive and use one. It’s not possible to acquire debt via a payroll card as one can do with a credit card because there is no line of credit, and overdrafts aren’t allowed.

Employee pay cards further promote financial inclusion and equity in companies with hourly workers or staggered scheduling, such as retail, restaurants, and other service-based industries. Certain employees may not always be in on payday to collect a check and will likely welcome the convenience of an automatically loading pay card.

4. Pay Cards for Employees are Secure

Because payroll cards require a PIN as an added layer of security, someone gaining unauthorized access to an employee’s funds is highly unlikely.

If a card is lost or stolen, a replacement card can be swiftly issued. In most cases, workers won’t be penalized for unauthorized card use if they report the problem to the issuer in a timely manner.

5. Payroll Cards Promote Financial Wellness

A great advantage of the payroll card system is that it helps boost workers’ financial wellness. Programs like Payactiv offer free financial planning tools and other resources that help employees budget, save, and build responsible long-term financial habits.

Payactiv users get free one-on-one financial advice and counseling appointments with professional coaches on saving and budgeting skills, debt management, and credit score improvement strategies.

Benefits of Employee Pay Cards for Employers

The potential savings for employers in using payroll card programs include reduced expenses related to the manual production and handling of traditional paychecks.

Efficiency is another compelling benefit, as employers don’t have to be physically present to hand over checks to workers or mail them to unbanked employees.

While the costs associated with setting up a payroll card system differ among third-party vendors, upfront fees are generally minimal.

Final Words

Combined with other financial wellness programs and Earned Wage Access, an employee pay card program keeps employees and employers happy. With the Payactiv employee pay card, you can ease the burden on your payroll team, enjoy better retention, recruitment, and engagement, and help your workers get on the path to long-term financial wellness with timely access to their hard-earned wages.

Contact us today to learn more about the benefits of our services for you and your employees.

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