Best Pay Cards for Tipped Employees: Why a Pay Card Alternative Might Be Best

Key Takeaway

While traditional pay cards offer benefits over paper checks, modern debit card alternatives like Branch provide superior value with no fees, full banking services, and financial wellness tools. In our analysis, businesses save $4-$20 per payment, and employees get free access to comprehensive financial services.

Quick Navigation

• Benefits of Pay Cards
• Traditional Pay Card Problems
• Branch Card Solution
• Competitive Advantages
• Frequently Asked Questions

Key Terms

Using a pay card for your tipped employees can have significant business benefits. Pay cards give you flexibility in when you send payments, so your staff can receive tips and other wages faster than they would with paper checks.

But can traditional pay cards for employees provide the pay experience your workers deserveand demandin today's labor market? Let's explore the benefits of pay cards for tipped employees as well as alternatives that can go one step further.

Why Should You Offer Pay Cards for Tipped Employees?

Eliminates Paper Check Costs and Fraud

Beyond the administrative hassle of issuing paper checks, they come with additional business expenses.

Each paper check costs between $4 and $20 in materials and processing.

Also, check fraud amounts to billions of dollars lost each year. Pay cards can eliminate this cost, hassle, and potential fraud.

Reduces Errors and Theft Potential

Reconciling cash in the till, having to make constant trips to the bank for change, and dealing with potential theft issues can all be huge headaches for business owners.

When you put tips onto a pay card instead of dealing with cash, tips can be sent automatically, which reduces the chance of errors or theft.

Makes Off-Cycle Payments Easier

Off-cycle payments are often needed in the hospitality industry. You're probably managing full-time, part-time, and temporary staff, all with different payment schedules.

Paper checks are inflexible and can cause payment delays. With pay cards, you can issue payments directly to someone's card whenever needed, whether that's tips, mileage reimbursements, bonus pay, or more.

Where Do Traditional Pay Cards Fall Flat?

Switching from paper checks or cash to pay cards is smart, but many traditional pay cards have not-so-great fine print that could mean additional hassle for you or your team. When evaluating pay card providers, be sure to note these common pitfalls.

Excessive Fees

Transaction fees, overdraft/late fees, minimum balance requirements, and more can eat away at workers' hard-earned tips. If your pay card doesn't have fee-free options, it might not be worth the trouble.Look for: A provider with free in-network ATM withdrawals, fee-free transaction options, and an overall transparent fee structure.

Limited Acceptance

A branded card (Visa, Mastercard, or Discover) are more widely accepted than an unbranded one. This means the card can be used for online purchases, bill payments, and more, without worrying about compatibility issues.

Physical Card Only

When it comes to spending, most people want flexibility in how they can use their money. Limiting people to a physical pay card without a digital wallet and contactless payment options (Apple Pay, Google Pay, and more) might feel inconvenient to your employees.Solution: Look for a provider with a user-friendly mobile app that provides a digital checking account in addition to their physical card.

Excludes Unbanked Workers

Traditional pay cards may leave many of your workers without financial services that could be helpful in their day-to-day lives. Some of your workers may not have a bank account and traditional pay cards can't fill that gap.Better option: Find a debit card for employees that comes with a digital banking experience, so you can provide a better payment experience for all of your workers.

No Financial Wellness Support

Today's workers want more from their employers. They want to feel seen and valued for their contributions. And they want financial wellness support.

Financial Wellness Statistics

According to a Transamerica Institute report, 77% of workers consider a financial wellness programs a crucial benefit, but only 28% of employers offer them.

How Does Branch Provide a Better Solution?

A debit card for employees like the Branch Card not only comes with a full digital banking experience, but financial wellness tools like personalized spending insights, cash back rewards, a savings goal feature, and more free tools to help workers get ahead financially.

Traditional Pay Cards

• Often have excessive fees
• Limited to physical card only
• Basic prepaid functionality
• No banking services
• Limited financial tools
• May exclude unbanked workers

Branch Card Solution

•  No fees or hidden costs
•  Digital wallet + physical card
•  Full digital banking experience
•  Comprehensive financial services
•  Financial wellness tools included
•  Serves all workers, including unbanked

Offering these perks in addition to a digital wallet and debit card solution shows your workforce you care about their financial wellbeing, which may be one of the smartest business moves you make.

Why Do Branch Cards Give You A Competitive Edge?

Traditional pay cards often have limited functionality. They aren't reloadable, and they don't come with any extra bells and whistles. On the other hand, what they can come with are some pretty hearty fees and inconveniences.

With Branch, you get the flexibility of a pay card without the fees or limitations of a traditional pay card program. You can instantly send cashless tips, mileage reimbursements, or any other type of payment right after each shift is done.

Offering more to your workforce could mean better recruiting, retention, and incentives, which we know is more challenging than ever. Plus, our no-cost, easy integrations with payroll systems simplify the entire process.

Full Digital Banking Experience

Mastercard debit card with comprehensive banking services

No Hidden Fees

No late fees, minimum balance requirements, or credit checks

Free ATM Access

Free in-network ATM options for cash withdrawals

Mobile Convenience

User-friendly mobile app with digital wallet functionality

Earned wage access (EWA)

Employees can request advances on earned wages before payday

Financial Wellness

Personalized spending insights, cashback rewards, savings goals, and more

Frequently Asked Questions About Cashless Tipping Solutions

What are the benefits of pay cards for tipped employees?

Pay cards eliminate paper check costs ($4-$20 per check), reduce fraud potential, enable faster tip distribution, make off-cycle payments easier, and reduce errors from cash handling.

What problems do traditional pay cards have?

Traditional pay cards often have excessive fees, limited acceptance, no digital wallet options, don't serve unbanked workers well, and lack financial wellness features that employees expect.

Why is Branch better than traditional pay cards?

Branch offers a full digital banking experience with no fees, wide Mastercard acceptance, mobile app convenience, earned wage access, and comprehensive financial wellness tools including cashback rewards and spending insights.

How much do paper checks cost businesses?

Each paper check costs businesses between $4 and $20 when accounting for materials and processing costs, making pay cards a more cost-effective alternative.