Payroll cards for employees - Benefits, types, and how to apply?
Decades ago salaries were given to employees of a company through cash. Over time, crediting an employee’s salary has shifted from hard cash to other methods like giving cheques or making direct bank transfers. Nowadays, a new way in which an employer can provide their employees instant access to their salary is through payroll cards.
Payroll cards for employees have become popular amongst businesses for a few reasons. These cards make it extremely easy for an employer to transfer money without any roadblocks or hassle and the employee also gets instant access to the money through these cards.
What is a payroll card?
A payroll card is a type of debit card that is given by an employer to an employee. These cards are linked to the employee's payroll account. It lets employees access their salary without having to cash a physical paycheck or have a traditional bank account.
The funds are electronically deposited onto the card every salary cycle and employees can use the card to make purchases or withdraw cash at ATMs. The best payroll cards for employees also let you easily track and manage expenses.
What are the different types of payroll cards for employees?
1. Branded payroll cards
These cards are typically issued by banks and come with the employer's branding. Employees can use these cards anywhere that accepts the card's payment network, such as Mastercard or Visa. These branded cards are not transferable in case you switch jobs.
2. Personalized cards
These cards have the employee's name on them and may offer additional features such as cashback rewards or discounts. Personalized payroll cards are very similar to debit cards offered by banks.
If your employer's company name or logo is not on the card, these cards may be transferable to a new employee in case you decide to change jobs.
3. Instant issue cards
These payroll cards for employees are typically provided on the spot by the employer or a third-party vendor, allowing them to access their wages immediately.
4. Portable cards
These payroll cards can be used by employees even if they switch jobs. They can do this since the card is not tied to a particular employer.
Apart from this, all the functions of the payroll card remain the same as the other types. In case you are switching jobs, you can ask your employer whether you continue using the same payroll card with your new employer or not. This will let you know whether you are using a portable payroll card.
Take care of both accounting and payroll from a single platform
How payroll cards work?
How do employees receive and access their wages using a payroll card?
When a person joins your company as a new employee, their payroll account will be created. Once their payroll account is created they will be enrolled into a payroll card program so that a card for them can be made. This can be a branded, personalized, and/or portable payroll card depending on your organization’s policies. Once this process is complete, the employee will receive their payment in the payroll card every salary cycle.
How to use a payroll card for everyday purchases and bill payments?
Employees can use their payroll the same way as any other debit card. They can use it for their daily grocery purchases at shops or supermarkets and also use them online to make various different bill payments. When you make a purchase using the card, the money will be deducted instantly similar to a debit card.
How to check the balance and track expenses on a payroll card?
Some of the best payroll cards for employees are those that are linked to online platforms that allow you to check and view the balance along with all the transactions that have been made using the card.
Benefits of payroll cards for employees
Payroll cards are extremely similar to a debit card and hence offer an easy way for employees to access their salary. They can use it in any accepted place to make purchases and also be used for online bill payments.
If you need cash, you can also use the payroll card to withdraw cash from ATMs.
Employees can track their expenses easily and set up alerts to receive notifications about deposits, withdrawals, and purchases. This helps employees stay on top of their personal finance and make better financial decisions.
Using your payroll account you can access and view all the transactions that you have made at any time.
Payroll cards offer increased security and fraud protection compared to cash payments.
If the card is lost or stolen, it can be quickly replaced and funds can be protected with a PIN or other security features such as temporarily freezing the cards so payments cannot be made through it or permanently blocking it.
Some payroll cards for employees offer budgeting tools within their system. These help employees track expenses, set spending limits, and plan for future expenses.
It essentially makes managing your expenses easier through real-time visibility of your money.
Some payroll cards offer reward programs that allow employees to earn cashback or points on purchases, and discounts on certain products and services.
This helps them earn more or save money on expenses.
Payroll cards provide access to financial services for employees who may not have traditional banking options, which can help to promote financial inclusion.
This may include things like personal loans, housing loans, and/or different types of insurance that are affordable.
What are the limitations of payroll cards?
Fees associated with payroll cards
While payroll cards have similar capabilities to debit cards, they may come with extra costs.
Employees may be subject to fees for using the card, such as transaction fees or ATM fees. This might not be a big issue for some people. But it might affect those that tend to withdraw cash from ATMs quite often and those who have a high number of transactions to be made each month.
Limited acceptance
While most payroll cards have widely accepted payment networks as their partners for card acceptance, not all merchants accept payroll cards, which can limit where employees can use the card.
Issue in accessing the salary in case of the card getting lost or damaged
Since there is no bank account associated with the payroll card, the employee might face issues such as not being able to access their money until they get their new card.
This can cause liquidity problems for the employee rendering them unable to make purchases for some time.
How Volopay’s payroll module can benefit businesses?
Volopay is a complete expense management system for a business that also has a payroll module within the platform. While payroll cards are good, they do have their limitations and are not beneficial or applicable to all businesses.
Organizations that have employees across different geographic areas, especially those working remotely will not find using payroll cards a suitable option. For such businesses, a system like Volopay that has multicurrency capabilities and a payroll module through which you can transfer money domestically and internationally is much more ideal.
You can easily create employee accounts within the system so that you don’t have to manually enter their details each month to make salary payments. You can also schedule the salary payments monthly and ensure that the approvals go out to the approvers so that no one misses out on receiving their payments on time.
To maintain confidentiality and sensitive information about each employee’s salary, this feature is only available to the admins of the platform. The admin role can be set and given to individuals of your choice within the organization.
FAQs on payroll cards
A payroll card is a type of debit card. When you use it to make payments through it, money is instantly debited or cut from your card balance.
Yes, almost all payroll cards allow their users to withdraw cash from an ATM. Depending on the card issuer and your company’s agreement with the provider, there might be charges applicable for withdrawing cash from an ATM.
A payroll card is as safe as any other debit or credit card when it comes to making payments online. You should ensure that you are using it on safe and secure sites so that your card details are not compromised.