Paycards have gained increasing popularity in recent years as employers look for more straightforward methods to pay their workers. Since paycards allow you to load funds instantly onto your employees' cards, they eliminate the need for workers to cash a paper check or make a deposit. They also help unbanked workers since a separate bank account isn't required to receive funds. However, many popular paycards also come riddled with hidden fees and inconveniences, making the payments process less than desirable for everyone involved.
You might be evaluating paycard options for the first time and thinking that fees and hassle are just par for the course. Or, your company may have used the same paycard provider for a long time and you believe this is just the way things have to be. But that’s where your company may be getting trapped. The truth is, a paycard shouldn’t be costing you—or your employees. There are ways you can send payments to employees quickly and securely without the unnecessary fees or hassle that many people have been forced to deal with for years.
How traditional paycards work
With most paycard programs, businesses set up their program and enroll their workers. Once payday rolls around, your company can initiate a deposit for each paycard—just like how you’d send direct deposits using payroll software. The funds are sent to each worker’s paycard almost immediately. This eliminates the need for paper checks or trips to the bank—or even for your employees to have a bank account at all.
How traditional paycards make money
Most paycard providers charge fees because that’s what their revenue model is based on. They need these fees to survive. And unfortunately, your company and your workforce is on the hook for them. Just some of the typical paycard fees you might encounter (or might already be familiar with) include:
- Activation fees
- ATM cash withdrawal fees
- Bill payment fees
- Card replacement fees
- Inactivity fees (if an employee doesn’t use their card in a while)
- Payment/POS decline fees
- Purchase fees
- Customer service fees
- Cash reload fees
- Transfer fees
These fees primarily fall on the employee, but can often land on the business too. And you have to read the fine print, as many of these fees are not advertised clearly.
Where traditional paycards fall short
Not only do traditional paycards often come with hidden fees, but they don’t always allow you to send funds outside of a bi-weekly direct deposit. Say you want to load cashless tips after an employee's shift? Or instantly send someone a stipend for a weekend of training? With traditional paycards, you may not always be able to send these one-off payments easily (or free of charge).
Replace your paycard with a debit card for employees
Want the ease of a paycard without the sneaky fees or hassle that they tend to come with? A debit card for employees can provide all the benefits of a paycard without costing time or money. Look for a debit card for employees that’s free, easy to use, and provides meaningful benefits to your employees. Here are some things to keep on your radar as you weigh potential options:
How does your paycard/debit card provider make money?
As we stated above, many paycard providers make money off of fees. But many debit cards for employees use an interchange revenue model instead. Interchange takes place when someone swipes their debit card. Interchange is not something you or your employees pay—it falls on the merchant. It’s something all major card networks have, and you likely don’t even know about it because you aren't charged for it.
How easy are off-cycle payments through your paycard/debit card provider?
If you send anything but direct deposit payments with some paycard companies, it’s going to cost you either money (in the form of hidden fees) or time (in the form of jumping through complicated payroll hoops). But real payroll doesn’t adhere to the two-week paycycle. There are bonuses, last day pay, stipends, and more. Plus, mistakes happen—if an employee forgets to clock in or needs to have a few hours added to their pay, you don’t want to have them wait two weeks to get their money or have to issue a separate, overnight check (which can be pretty pricey). Look for a provider who makes anytime, one-off payments just as easy as an employee's regularly scheduled direct deposit.
How comprehensive is the paycard/debit card program?
Branch isn’t just a debit card for employees—we're an entire workforce payments platform that delivers benefits to both your business and your workforce. You can choose whichever tools help you pay your people faster and fit the needs of your workforce, from earned wage access to cashless tips and mileage reimbursements, 1099 digital disbursements, and more. Our debit cards for employees also come with cash back rewards and personalized spending insights that make budgeting and financial wellness more attainable for every employee.
If you’re looking for a way to issue instant payments to your workers of any kind (at any time), at zero cost, Branch has you covered.
To learn more about our free debit cards for employees and other fee-free financial services, contact firstname.lastname@example.org.