More employees say'hello'to payroll cards by zyc19183


									            More employees say 'hello' to payroll cards
            By LaRita Heet
            Published: September 29, 2009

            When the nation's largest private employer announces it's discontinuing employee
            paychecks in favor of a 100 percent paperless payroll system -- in part through the use of
            payroll debit cards or pay cards -- it's time to sit up and take notice.

            According to Wal-Mart spokeswoman Michelle Bradford, pay cards will be used to pay
            approximately about half of its 1.4 million U.S. employees who choose not to use direct
            deposit, which Wal-Mart will continue to offer.

             Making the transition from paper to plastic payroll raises a slew of questions and
             concerns, much as direct deposit did when it was introduced in the 1980s. But Wal-Mart's
             Bradford insists, "The program will make life easier for our associates and also have a
             positive influence on society, from a sustainability standpoint." Wal-Mart expects to save
             more than 250,000 pounds of paper per year -- and thereby reduce its payroll costs
significantly with its new pay card debit card program. (See An employee guide to pay cards).

Wal-Mart is far from the first employer to pay its employees via pay cards, but it's the most visible.
What are pay cards? We turned to payroll card experts, users and employers to find out.

Pay cards by the numbers
In 2008, $17.22 billion was loaded onto pay cards in the United States -- up 26 percent from $13.64
billion in 2007, according to Brent Watters, senior analyst for Mercator Advisory Group in Maynard,

"It's definitely grown, and we can attribute a lot of this growth to the current economy, which has
definitely positively impacted this segment, as companies are looking for ways to cut costs, reduce the
amount of paper used in daily operations -- so that means moving from a paper to a plastic method for
payment," says Watters.

What are pay cards?
According to the American Payroll Association, pay cards are payroll debit cards that operate much
like a bank account-affiliated debit card, complete with a PIN. Employees can usually use paycards for
ATM cash withdrawals and point-of-sale (POS) or online purchases, though the exact applications
vary by employer and pay card vendor.
The primary difference between a traditional bank debit card and a pay card is the employer creates
the "banking relationship" with a financial institution -- rather than the employee -- and electronically
reloads the card with the employee's wages each payday.

Pay card vendors, including First Data (with whom Wal-Mart is partnered), Payoneer, ADP and
Ceridian, offer a variety of pay card programs and products, including branded and unbranded pay
cards. "Branded" cards are those that include the MasterCard, Visa, Discover or similar logo and can
be used with a PIN or as a "signature-based" card with which cardholders sign for purchases as they
would with a credit card. The Wal-Mart pay card is a MasterCard.

"Unbranded" cards are debit cards that may only be used at ATMs or POS terminals by using a PIN.
These cards, which are not affiliated with a credit card network, are typically tied into the Cirrus, Star,
PULSE and Plus POS systems, according to the American Payroll Association.

How pay cards work
In addition to Wal-Mart, numerous other public and private employers, including Sears, CBS,, Kelly Services and BJC HealthCare, have adopted pay card programs.

"Wal-Mart is raising the bar for employers everywhere by providing associates who don't have bank
accounts with immediate access to funds on payday, without fee or discount, and access to cash at
thousands of locations across the country," says Ed Labry, president of retail and alliance services with
First Data.

The pay card programs offered by employers -- including Wal-Mart -- can come with a list of fees,
which vary by employer, vendor and pay card
                                                   There's no hassle getting your paycheck cashed. Your money is direct
                                                   and available immediately.
Danville, Va., self-employed ghostwriter and
graphic artist Becky Blanton, 53, has used pay
cards for more than five years. "There are fees for transactions on the card -- either $1 to $1.50 per
transaction or $10 per month flat rate for unlimited transactions and a $1 fee at ATMs. Every company
varies, but the fees work out to be about what a bank would charge for a debit card. There are fees
($.50) for checking your balance via phone, but it's free to text a balance request or to go online to
manage your account," says Blanton.

Wal-Mart employees pay no account maintenance fees and can access their balance information for
free online, via text message or voice mail. All employees can access 100 percent of their pay at any
time at any Wal-Mart or Sam's Club cash register, says Bradford.

According to Glen Turpin, First Data's director of communications, Wal-Mart employees will also
have access to free Money Network checks, which can be used to pay bills or withdraw cash at a Wal-
Mart cash register for free. "Money Network's payroll distribution service offers the convenience of
debit card and check ownership without having a bank account, " says Turpin.

Wal-Mart's pay card program also allows each employee one free ATM transaction per pay period.
Each subsequent pay card ATM transaction costs $2. Wal-Mart and its pay card provider declined to
disclose any additional fees. Prepaid and debit cards typically are fraught with fees, so it pays to
familiarize yourself with all fees involved and reading the fine print carefully.

"We've succeeded in making it as close to fee-free as possible," says Bradford.

The convenience factor
Pay cards are convenient, says Blanton. "There's no hassle getting your paycheck cashed. Your money
is direct-deposited and available immediately," she says.

Early in 2009, a strategic partnership between prepaid and pay card vendor, Payoneer, and,
a marketplace for freelancers, was announced. "Pay cards are a nice fit for the freelance lifestyle. A
part of the allure of working for yourself is the flexibility to work when, where and how much you
would like," says spokeswoman Kristen Sabol. "Often, this means that freelancers will take
work with them as they travel. With a pay card, you can easily collect your paycheck anywhere in the
world without missing a beat."

                                          Payoneer spokeswoman Mary Kae Marinac says more than
Wal-Mart is raising the bar for employers everywhere by providing associates who
don't have bank accounts with immediate access to funds on payday.
                                          85 percent of pay card holders are located outside
                                          the United States. "For them, receiving payment from a U.S.
company is a time-consuming and costly proposition because checks get lost or stolen. Wire transfers
are costly ($10-$25 each) and require you physically get yourself to a bank during its open business
hours," she says.

"I took mine to England with me this summer," says Blanton. "I used it at the airport and with
exchange services for money and had no problems."

The growing pay card trend
Mercator predicts continued growth in the pay card industry. "We're still kind of in this recessionary
period, and companies are still struggling, looking to drill down on that bottom line and reduce costs
as much as possible. So, we expect to see again, for 2009, a significant increase in the adoption of
payroll cards," says Watters. "Also, the networks -- Visa, MasterCard and Discover -- are out there
looking for ways to drive adoption. They understand this is happening, and they're looking to enhance
these cards with advanced features."

The bottom line? "By utilizing payroll cards, depending on the size of the operation, a significant
reduction in cost can be realized in that transition from paper to plastic," says Watters.

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