What are the benefits? What are the drawbacks?
Payroll cards provide significant cost savings for employers and can be used in several ways, including regular pay, reimbursing expenses, bonus and reward payments, paying remote employees, termination payments, payroll adjustments, commission payments, or other one-time payments.
As with a standard debit card, there is always the risk that an employee with lose her debit card. Some stores do not always check for identification when someone comes in to process a credit card transaction. In this case, if someone uses a stolen card and chooses to process his payment as a credit card, employer and employee lose that money. The employer has to work to recover those funds from the merchant via his payroll administration company, and the employee may have to wait days after payday to access his pay.
Advantages and disadvantages of payroll services. Payroll is a business-critical operation for every organization. You must pay your staff accurately and on time to avoid low morale, poor performance, and possibly even reputational and legal difficulties.
IMO, the preferred method of paying employees is ALWAYS direct deposit. I have yet to see a good argument that any other method is better (or as good). HOWEVER, you generally cannot force employees to get a bank account or use direct deposit. Most states have laws to that effect, and the feds have a poorly worded regulation that says sort of the thing, backed up by some more clearly worded court decisions.
Pay cards are IMO the next best option. HOWEVER, they generally are more work and more expensive then direct deposits and are legally restricted in some states.
Checks are a bad alternative. They are subject to being lost in the mail and various methods of fraud. Paper is evil.
Cash has all of the problems of checks with none of the virtues. Although in the 1980s we had a senior manager who Very Senior Management really did not like. I was instructed to pay him in pennies (no wrappers, just one big bag). Employee thought we were trying to make him quit. Employee was right.
I have read postings on paying people with "alternative currencies" such as Bit Coins. Check your state law before wasting time on those. It is very common for state law to say something like "payment must be made in a media immediately exchangeable for cash without discount". That rules out many types of Pay Cards.
Finally, lets say your employee dies (RIP). Two different people claim to be the heir. Do you give each of them 1/2 of the pay card? Hire an attorney? I am not saying it is legal, but I just make the direct deposit and let the bank deal with the "grieving" relatives.
Paid in pennies - David, that's an amazing story! And they say payroll isn't fun.
Paycard programs have changed (for the better) over the years. Little or no cost to employee or employer, and the vendor does the heavy lifting on implementation, and ongoing customer service is a hands-off experience for HR and Payroll. We went with Money Network and couldn't be happier. No escheatment, no lost checks, no lines of employees picking up their check on paydays. Employees love the App and ease of use.