05/ 30/ 2007
Paper or plastic? With the growing popularity of payroll cards, more businesses are pondering that question. The answer was easy for Mallard Group, a Grand Prairie, Texas-based company with a workforce that is on the road year-round.
Mallard Group, which specializes in setting up and breaking down displays for retailers such as Lowe's Home Improvement, employs as many as 160 people, depending on the season. The company used to overnight weekly paychecks to employees. "It was a nightmare," says project manager Renee Stephens. "We pay per diem. Before we even got the checks out on a Friday, five of the people who were in California may have moved to Florida. With the nature of our work, and our business growing as much as it was, it got entirely too cumbersome."
In October 2005, Mallard Group abandoned paychecks in favor of payroll cards issued by Elan Financial Services, a subsidiary of U.S. Bank. "It ended our headaches, and our crews love it," Stephens says.
Payroll cards work much like personal debit cards. The big difference is that when an employee inserts his payroll card into an ATM or point-of-sale terminal, the funds are drawn from his employer's payroll card account. Most workers, especially those who don't qualify for bank accounts, welcome the cards.
Payroll cards offer employers many of the benefits of direct deposit. They eliminate the cost of check stock and printing. And because workers use the same card each week, you reduce the cost of delivering checks to distant work sites. In the first year, Stephens estimates that Mallard Group saved at least $1,000 on delivering, printing and sending checks to employees.
For now, the cards aren't allowed in a handful of states where wage-payment laws are unclear. Elsewhere, payroll cards are issued by financial institutions, payroll service providers and third-party vendors. Look for card issuers that provide theft and other consumer protection and a reasonable fee schedule. Since the cards are treated like direct deposits, you'll need a payroll system that links to an ACH electronic payment network.
