Ms. Laura McGrory
Director, Industrial Commission of Arizona
800 W. Washington
Phoenix, AZ 85007
Dear Ms. McGrory:
I am writing to ask for your support in allowing employers in the state to pay their employees
using purely electronic means. This can be achieved by giving employees the choice of
receiving their wages through direct deposit or a payroll card. Currently, it is unclear under state
law whether such a program would be permitted.
Electronic wage payment would benefit our Company and employees in many ways, especially our
underserved employees. The underserved segment of the population is defined as low-income
wage earners who do not have a banking relationship or have a limited banking relationship due to a
low credit score. Therefore, they are not eligible to participate in direct deposit and receive their
wages via paper paycheck. It is estimated that there are over 28 million1 underserved employees in
Electronic wage payment through either direct deposit or a payroll card provides all employees
immediate access to their wages and eliminates the need for an employee to stand in line to
cash their check or carry large amounts of cash. Payroll card programs allow employees to
withdraw their entire net pay at least once each pay period without cost and can be used to
conveniently pay bills (online, by phone, etc.) as opposed to needing to purchase money orders
and/or travelling distances to pay bills in person. A payroll card can also be used to make
purchases at any of the millions of merchants world-wide who accept debit cards. An additional
advantage of a payroll card is that everyone qualifies since no banking relationship or minimum
credit score is required.
Our Company also would benefit from paying its employees electronically because electronic
wage payment methods are more efficient, reliable and secure than paper paychecks. Paper
paychecks cost the Company a considerable amount of money. The Comptroller of the
Currency estimates that it costs employers up to $2.00 to issue, handle and deliver a single
paycheck.2 In addition, delivering paper paychecks in a timely manner can be challenging
particularly when faced with inclement weather, natural disasters or even a disperse workforce.
In contrast, payroll cards are one of the least expensive ways to distribute wages and facilitate
timely wage payment even when unforeseen obstacles arise.
Payroll cards are functionally similar to the prepaid cards currently being used by more than 35
states to disburse workers’ compensation, TANF, child support and/or other government
payments. Electronic wage payment would allow our Company and other employers to achieve
the same costs savings that many states are realizing through the elimination of paper checks.
These savings could then be reinvested into the Company, which would help us to preserve
jobs in the current economic downturn.
Center for Financial Innovation, “Acquiring Underbanked Consumers with Prepaid”, October 5, 2006
Comptroller of the Currency, “Payroll Cards: An Innovative Product for Reaching the Unbanked and
Underbanked”, June 2005, located at http://www.occ.treas.gov/Cdd/payrollcards.pdf.
In these challenging economic times, I am asking you to become a proponent of allowing
employers within the state to pay their employees 100% electronically. Thank you for your
consideration of this issue.
CC: Mr. Randall Maruca
Industrial Commission of Arizona
800 W. Washington
Phoenix, AZ 85007
BENEFITS OF ELECTRONIC WAGE PAYMENT PROGRAMS
1. Paying wages electronically benefits both employers and employees.
Many employees may not be able to participate in direct deposit because they
do not have a savings or checking account.
Giving employees the choice between direct deposit and payroll cards,
means that all employees can participate and receive their wages
2. Electronic wage payment can save employees money.
Unbanked employees pay large amounts to cash their paychecks and
purchase money orders to pay bills. These costs are significantly reduced, if
not eliminated, when wages are paid electronically.
Payroll card programs typically give employees the ability to make at least
one withdrawal or transfer each pay period without fees, meaning that
employees may access all of their wages without cost.
3. Electronic wage payment allows employees to receive their wages in a
timely manner and facilitates compliance with strict wage payment
Employees have immediate access to their pay no matter where they are.
Most problems relating to the delivery and access to wages during natural
disasters and other emergencies are eliminated when wages are paid
Electronic payroll programs can be structured in such a manner as to enable
employers to overcome the obstacles that are often associated with paying
final wages in a timely manner.
4. Employers save money when they eliminate paper paychecks. These
savings can be reinvested into the workforce and the economy.
Electronic wage payment can help reduce the costs associated with paper
paychecks by approximately 76%.
The Comptroller of the Currency estimates that it costs businesses between
$8 and $10 to replace a lost or stolen paycheck, and that approximately 4
million paychecks are lost or stolen every year.
Electronic pay methods can help reduce fraud by eliminating the potential for
The elimination of paper paychecks supports the state's green initiatives by
reducing the consumption of natural resources.
5. Convenience to employees and prompt access to wages translates into
increased morale and a more productive workplace.
Employees spend less time during the workday handling personal finances
(e.g., going offsite to cash check, standing in check cashing lines, etc.).