With Hurricane Sandy bearing down across the east coast, small businesses are reminded of the importance of disaster preparedness planning. And direct deposit paycards are an important part of any such plan.

Both local and non-local emergencies can make receiving pay on payday difficult if not impossible for workers who aren't on direct deposit. When natural disasters occur in a hub city from which paychecks are mailed or air traffic is grounded, employees can not receive paper pay checks in a timely manner.

Yet according to a recent NACHA study, small businesses account for nearly 50 percent paper checks written in the U.S., not including government checks. Research suggest that many of the paper checks written in the US are small B2B payments but 12 percent are for small business payroll with two-thirds of small businesses not offering direct deposit via ACH to their employees.

Small business report that they have not adopted direct deposit for payroll for a variety of reasons including that they feel they too few employees, employees prefer checks, or direct deposit is too expensive. However as any small business that has had to deal with replacing lost checks or fraud from stolen checks knows, the added security of protecting the business routing and account number that comes with direct deposit is highly valued. According to an article in the Minuteman News Center, checks have proven to be a dangerous payment method for quite some time and that in 2010 over 540,000 mailed checks were reported lost or stolen and had to be replaced.

Combining direct deposit with paycards, businesses of all sizes can improve efficiencies, reduce costs, and provide their employees with a convenient, value-added benefit. Direct deposit lowers the costs associated with printing and distribution of paper checks, paper check fraud and escheatment. Paperless pay especially benefits unbanked employees. And Hurricane Sandy reminds us of the need to implement a disaster preparedness plan that includes payroll direct deposit and paycards to help ensure all employees get paid when they need it the most.

A recent article “Why Banks Shun 30 Million Americans” makes the case that banks are uninterested in the unbanked and underbanked customer and that mega-retailers don’t offer much long-term value.

New federal regulations have impacted the banking industry’s business model of subsidizing once “free” services, driving banks to focus on “profitable” customers while discouraging others with higher fees on basic banking services.

Big retailers have stepped in to profit on the unbanked by charging fees to cash checks and by selling prepaid debit cards. Retail fees charged for these services, when added up over time, can be just as high as maintaining a checking account.

Yet one of the best solutions for the unbanked and underbanked was not discussed at all: Employer paycards. Unlike retail prepaid cards that carry load and usage fees that make it profitable for retailers to sell them, employer paycard programs offer all the benefits with much lower costs.

For example, our employer paycard program is a completely free service to employers, with no contracts; no set up fees; no card fees and no minimum number of cardholders. Employers can lower expenses associated with “paper” payroll and mandate direct deposit while complying with all "pay without discount" regulations. Our full deployment program meets state regulations and provides cardholders with a Visa paycard with:

• No Monthly Fee
• 1-Free Teller Withdrawal per Pay Period (true pay to the penny compliance)
• Toll Free Balance given automatically when calling the number on the back of the card

In fact, our cardholders can realize all the benefits of having a paycard and not incur any fees.

• Free Payroll Card Enrollment
• Free Signature Purchases
• Free Online or Phone Purchases
• Free Debit Purchases
• Free Debit Purchases with Cash Back
• Free Online Access

Given that every legal US resident qualifies - banked, unbanked and credit-challenged employees are starting to take the initiative to find and introduce paycards to their employer.

We encourage employers and employees alike to pilot our Visa paycard.

The recently signed financial regulatory overhaul bill named the Dodd-Frank Wall Street Reform and Consumer Protection Act is expected to reduce the debit card Interchange fees used to support free consumer check accounts. This is on top of the loss of overdraft fee income. As a result, big banks are requiring higher minimum balances to qualify for a free checking and adding other service fees.

What will this mean for employers?  For one, employees may opt to close their traditional bank accounts. And if your employees move from banked to unbanked status, this will impact their participation in direct deposit.  Fortunately, the Dodd-Frank act offered an exemption for reloadable prepaid and government-administered debit card programs. This compromise is an attempt to protect the unbanked from being driven to payday lenders and other non-bank entities for their financial needs.

Employers benefit by introducing paycards as an option to their unbanked employees for direct deposit of payroll. Some employers are using paycards to mandate direct deposit participation. And for good reason. Here are some of the top reasons employers are offering payroll debit cards to employees:

• Decrease costs associated with printing paper paychecks.
  Direct deposit lowers the costs associated with printing and distribution of paper checks, paper check fraud and escheatment. Since paycard programs are able to work with all payroll systems, employers are able to increase direct deposit participation or achieve 100% direct deposit by implementing payroll debit card programs so they can mandate direct deposit for all employees.
• Offer unbanked employees a way to improve personal finances.
  Many employees are unable or unwilling to get a bank account. Paycard initiatives benefit employees by helping them avoid check cashing fees, saving upwards of $40 a month. Paycards are safer and more secure than carrying cash and provided access to additional services including online account access 24/7, online bill pay, and money transfer features. By using Moneygram or Visa ReadyLink, employees can also add cash to their card any time. And paycards like the Vantage Platinum Pay card have expanded text alert options for low balance, suspected fraud, zero/negative balance, weekly balance, added funds, signature transactions, and more.
• Complement corporate disaster preparedness plan.
  The APA encourages direct deposit paycards as a disaster preparedness tool. It's clear how local emergencies make receiving pay on payday difficult or impossible for workers who aren't on direct deposit, but non-local emergencies can also pose a challenge. If something happened in a hub city from which paychecks are mailed or air traffic is grounded, employees wouldn't receive paper pay checks in a timely manner. Across the US, many are forecasting a particularly challenging weather-related year, making the need to implement a corporate disaster preparedness plan that includes payroll imperative. A disaster plan that includes electronic payments for payroll lowers payroll costs while ensuring employees get paid, when they need it the most.
• Support green initiatives.
  The environment comes out ahead when paper checks are replaced with electronic direct deposit. Every little bit helps and a free paycard offering effectively increases direct deposit while supporting efforts to go green all at the same time. US employers of all sizes are incorporating direct deposit payroll debit cards as an alternative to the costly paper checks and an important component in going green.

Learn more about how implementing the Platinum Pay payroll card program can help you move all your employees to direct deposit by visiting http://vantagecard.com/paycard.

Another big benefit of having your pay direct deposited onto a Visa payroll debit card is that you can use the same routing and account number to also file your tax return electronically and get your refund directly deposited to your pay card in weeks instead of months!

According the IRS.gov, you can get your refund faster by telling the IRS to direct deposit your federal income tax refund on up to three different accounts.  If you want the IRS to deposit your refund into just one account, use the direct deposit line on your tax form.  However you also have a choice to direct deposit your refund to more than one account.  With split refunds (use IRS’ Form 8888), you have a convenient option for managing your money.  For example, if you use two paycards within your family, you can instruct the IRS to divide and share the refund at your request.  

Give your tax preparer your Visa debit paycard's account and routing number, and your refund will be deposited to your card directly. No more waiting for your paper refund check to arrive in the mail. Electronic refunds usually arrive in 7-10 days after filing.   With this method you can guarantee the delivery of your tax refund and get your refund dollars faster.   Sending your refund to paycard account for immediate use can save you the expense of taking a loan against your refund.   Tax refund loans fulfill customers' demand to get refund dollars quickly, however, the cost of these loans eat up much of the refund.  Just like the savings from avoiding check cashing service fees on pay day, speeding your tax refund using your paycard will reduce the need for expensive tax refund loans. 

Whether you file electronically or on paper, direct deposit gives you access to your refund at least one week faster than a paper check.  Direct deposit also avoids the possibility that your check could be lost or stolen or returned to IRS as undeliverable.  The IRS processes around 120 million individual income tax refunds. Of those, millions of refunds are unable to be delivered due to address changes and incorrect account information.  Some refunds took up to three months to be received.   Don't let this happen to you!  

Enjoy savings, safety and faster tax refunds using your Visa debit payroll card for direct deposit.  Ask your employer for a paycard today or order now.

Ps. Want to get a tax return deposited to your paycard at the beginning of every month?  Learn how.

According to a new survey commissioned by Visa Inc., U.S. consumers whose primary payment method is their debit card would rather give up coffee, their MP3 player, their mobile phone, email, visiting social network sites for one week than they would their debit card.

Employers issuing Visa payroll debit cards to under-banked workers not only benefit by moving all employees to direct deposit but are also providing a cash management tool highly valued by employees.  Consumers are focused on controlling spending and understand that cash purchases can be difficult to track.  The Visa survey reveals that consumers believe debit cards can help them monitor spending more closely and stay within budget.   Plus employees enjoy convenient access to their funds by using their Visa debit paycard with a level of control and protection not offered by cash.  In fact the Visa survey found that younger adults between the ages of 18 to 24 claim to lose track of $2,500 in cash annually, more than twice the average amount.

Debit can help solve the disappearing cash dilemma and can provide an easy and effective way for consumers to access available funds for purchases.  Employers can have a positive impact on their unbanked employees by providing tools to help them manage spending. And, according to the Visa survey, consumers agree:

• Overall, debit cards ranked as Americans’ primary payment method for personal and household expenses (37 percent), which is considerably above cash (22 per cent).
• Over two-thirds of debit card users (68 percent) prefer to use their debit card instead of cash whenever possible.
• Three-quarters of U.S. consumers using debit cards (76 percent) agree the cards provide an easy way to track spending.
• Three in five U.S. consumers who use a debit card (61 percent) say that using their debit card helps keep their mystery spending to a minimum.
• Two-thirds of U.S. debit card users (63 percent) find that tracking their debit card spending helpful in sticking to a budget.

For over a decade there has been a shift in consumer behavior toward debit cards.  The period ending December 2008 marked the first time that spending on Visa Debit cards surpassed spending on Visa Credit cards; comprising  approximately 70 percent of Visa’s U.S. transactions.  As a result of these consumer payment choices, more places that were traditionally cash only are now accepting payment cards.   In fact, its been recently reported that many retailers are piloting or implementing 'No Check' policies including several large grocery chains, a move that should act to further encourage payment cards at the POS. 

With consumers preferring debit cards to cash and stores preferring card payments to check payments, employers should make 2010 the year to mandate direct deposit by providing Visa debit payroll cards. 

The number of “unbanked” Americans rose 1.3 million nationally last year, according to a survey released Wednesday by the Federal Deposit Insurance Corp.   Of the unbanked Americans in 2008, more than 31 percent said they closed bank accounts because of overdraft fees, service charges or high minimum balance rules.  Yet they are substituting other more costly, less regulated services like payday loans, check-cashing services and pawn shops for their financial needs. 

While few banks are reaching out to under-banked communities, employers can pick up the slack by moving employees to direct deposit using a Visa debit payroll card.  And employers can help control costs by negotiating group discounts for their unbanked employees. 

Payroll cards benefit both the employer and the employee as an added benefit.   Employers find that direct deposit on a payroll card is less costly than issuing paper checks, and reissuing lost or stolen paper checks.  Distributing pay through direct deposit is less disruptive and more efficient than handing out paper checks or mailing checks.  Getting payroll distributed to employees electronically should be considered as part of every companies disaster planning. 

For their part, employees without bank accounts should request a payroll card from their employer.  Payroll cards can costs as little as a $1.95/mo or less than $25 a year (lower than many credit card annual fees) since there are ways to use the cards that avoid all other usage fees.  For example, free cash back at the grocery check out verse using the ATM.  Transactions such as debit purchases (both signature and PIN debit) are also free.  The costs of carrying a payroll card is less than a traditional bank account and far less than paying to cash a check.  Visa debit payroll cards are more secure than carrying cash (stolen or lost cards can be replaced unlike cash and purchase protections are provided when using a card) and more convenient.  And payroll cards aid in managing expenses through statements and reports. 

For the FDIC's part, if they are serious about their goal to bring the “unbanked” into the financial mainstream, they need to address "pay without discount" rules.  Issuing paper checks is not only not green but is more costly to employees without bank accounts forced to find alternative ways to cash company checks. 

Recently I’ve seen a few stories like this one in the New York Times: Prepaid, but Not Prepared for Debit Card Fees. In the article, author Andrew Martin explores the numerous fees many card companies are charging their customers. The moral of this story from my perspective is that it pays to shop around. Not all prepaid debit cards are alike.

Avoid buying a prepaid debit card. We advise consumers wanting a prepaid debit card to get a payroll debit card instead. Consumers can get a payroll debit card from their employer or sign up directly with a payroll card provider (for example online at http://vantagecard.com/paycard) and then simply provide the card’s routing number and account number to their employer for direct deposit.

Payroll cards have lower costs than prepaid debit cards sold in a retail environment and consumers can eliminate some and greatly reduce many of the fees outlined in the New York Times article. Choose a payroll card that can be used across multiple employers and one that allows a card reload through the Visa ReadyLink service.

Consumers are also advised to learn how to avoid fees. For instance, getting cash back at the grocery store (selecting a paycard that does not charge for PIN debit transactions) is a strategy that can be used to avoid ATM fees. Or choose free online statements instead of having billing statements mailed (no charge and better for the environment). We publish a “best practices” guide for cardholders to help them learn to eliminate fees while encouraging unlimited free card purchases and recurring bill payments.

Another benefit of a reloadable payroll debit card is that consumers can use the routing and account number to set up auto draft ACH for recurring car payments or rent directly from their paycard account.

Prepaid debit cards appeal to many people for many different reasons, with some 80 million consumers driving a growing demand. But it is important to be an educated consumer. Shop smart and save on unnecessary fees and enjoy all the benefits and conveniences of card payments.

Shopping for a prepaid debit card? Compare costs and read the terms & conditions of our Platinum Pay Visa debit payroll card.

The American Payroll Association is part of an initiative to eliminate the use of paper paychecks nationwide. Currently, employers can go paperless in about 20 states. We’re tackling the rest state by state, and we need help from employers! We’re posting sample letters pre-addressed to the state officials in those states that currently keep employers from enjoying a paperless payroll. If you are an employer, please download a copy of the letter, personalize it, and send it on company letterhead.

The focus of the request is to allow employers to mandate direct deposit. Where employees do not provide their bank account information, employers should be able to provide paycards instead of paychecks.

Please join the effort!  Sample letters can be downloaded from the “ Green State ” link at: http://www.americanpayroll.org/government/government-021/

Thousands of employers currently offer Visa payroll cards to employees and for companies looking to go green, streamline payroll operations and lower costs, paycards are only gaining in popularity. The Visa paycard is designed as a financial tool; providing employees a way to participate in their company’s direct deposit program. U.S. employers are realizing significant savings while helping their employees avoid the escalating costs associated with check cashing fees and delays in receiving their checks via mail or pick-up.

CARD BENEFITS

The benefits of direct deposit have been well documented for years. Payroll professionals all tend to agree that increasing direct deposit and reducing, or even better, eliminating the antiquated paper check creates a positive impact to employer and employee alike. With paycards, employers now have the ability to enable every employee to participate in their direct deposit system. By using prepaid Visa paycards, all legal U.S. residents with a valid tax ID are eligible. No credit checks are performed.  No credit reporting is submitted. A simple enrollment is all that is required.

Paycard service pricing varies by provider but there are many programs that can be implemented for FREE by employers. There are no set up costs, no software to buy or learn, no card cost and no minimum number of employees to enroll. Additional program implementations include mandating direct deposit that meets “pay without discount” regulations and co-branded Visa pay cards. Custom implementations are available to meet individual employer requirements.

Paycards are a tremendous employee benefit and a huge improvement over traditional paper checks. Wages are directly deposited to the employee’s paycard without a trip to pick up a paycheck. With the security and convenience of a Visa debit card, your employees will save time and money. Employees can withdraw cash from any ATM or opt for cash back at millions of merchants worldwide. Employees can make purchases using their Visa card or transfer money instantaneously to another pay card domestically or internationally.

For cardholders, fees can vary. The best programs provide unlimited free usage for Visa purchases and unlimited free PIN based cash back transactions. This is important because statistics show, that on average, employees will use their card as a Visa 27 times during the month.  Upfront card fees can be avoided by loading value within 45 days of card issue. Free balance inquiries via a toll free line and free online services including statements, transaction inquiries and customer service and with unlimited free usage and monthly fees as low as $1.95/mo means that unbanked employees who have typically paid expensive check cashing fees can now use a valuable financial tool for less than $24 a year.

By offering your employees more than just a pay check, funding a Visa payroll card provides a financial tool to help them manage their lives. As employees use the convenience of Visa recurring payments to pay their mobile phone, rent, utilities and more, employers benefit with increased employee retention. The safety and security of Visa, coupled with 24x365 cardholder customer service, results in savings for your organization.

FUNDING OPTIONS

With instant funding options, companies can use prepaid Visa cards to meet a number of remote worker financial needs. Employer and employees both enjoy the security and convenience of Visa—prevents stolen check fraud, the funds are FDIC insured and card fraud protection is provided by Visa. The most common funding method uses existing Direct Deposit (ACH) solutions to fund the card. Employers also enjoy instantly moving funds to cardholders by establishing a funding account. With a funding account, employers can simply upload a payroll file for processing or manage transfers themselves over the secure web site.  With Visa ReadyLink, paycard cardholders can easily add funds to their reloadable card at places conveniently close to where they live, work and shop.

DISASTER PREPAREDNESS

Visa paycards can also play an important role in the support your disaster recovery plans.  Recent history has brought disaster payroll planning to the forefront for employers nationwide.  Hurricane Katrina made pay distribution virtually impossible as mail and overnight delivery services became suspended. Workers were required to flee their homes and employers had a difficult time locating employees to redirect their much-needed paper checks. For the displaced victims that were enrolled in a payroll debit card program, getting paid during this time of crisis was one less thing they had to worry about. They received their pay on payday, regardless of their whereabouts. Amid the aftermath of hurricanes, snow storms, tornadoes, or terrorist attacks, the paycards can help ensure that your people are paid promptly when disaster strikes.

A COMPELLING VALUE PROPOSITION

Visa payroll cards are helping businesses cut administrative costs and virtually eliminate paper check expenses. Few solutions are so easy to implement. Utilizing the same procedures and system infrastructure currently in place, providing a mix of card options including payroll cards and instant issue cards and delivering large scale savings, the old saying “it’s not if, but when” truly fits. With no costs and no minimum number of cards to roll out, and as a completely optional benefit to the employees, it’s easy to execute a small pilot program. For cardholders, lower costs, safety and security coupled with online enrollment and no credit check make getting started with a Visa paycard easy.