Canadian HR Reporter

CANADIAN HR REPORTER September 4, 2017 FEATURES 25 shifts with direct deposits that hit their account the moment they walk out the door. Consumers, and millennials in particular, desire more self- service options and expect con- venience, personalization and direct engagement in every facet of their lives. Mobile apps inherently lend themselves to self-service, and consumers enjoy being able to make decisions, purchases and otherwise interact with their apps on their own terms. Payroll cards also give consum- ers real-time, up-to-the-minute snapshots of their balance and card spending, often via an online portal or app. Prepaid tools ensure there is no way to overdraft or rack up debt, providing an effective way to avoid overspending — which traditional banking and credit products aren't designed to do. Consumers who use general- purpose reloadable and payroll card products are also highly banked, according to a 2015 re- port from the Philadelphia Fed- eral Reserve Bank of Philadelphia Payment Cards Center. Some employees use payroll cards to distribute money to fam- ily members they support finan- cially, such as their college-aged children. Others use the cards to carry their spendable, "fun mon- ey" safely. Impact of gig economy In the gig or on-demand econo- my, change is driving demand for payroll cards. Industries such as oil and gas, construction, transportation and hospitality often need to pay em- ployees at the end of a shift or by the job, which is highly inefficient and sometimes impossible with a paper cheque. Some employers resort to cash payments, which have even more drawbacks, such as loss and fraud. At the same time, many em- ployees across the restaurant, construction and transportation industries struggle to make ends meet in between traditional bi- weekly or even monthly payment schedules, so employers are be- ginning to offer more frequent and flexible payment alternatives to remain competitive. When running payroll on a prepaid platform, employers have more options to be respon- sive to employees' varying needs. Downsides to cheques Beyond offering the benefits of employee recruitment and reten- tion, prepaid cards can eliminate costly cheques. A cheque costs up to $3.85 more to originate, administer, reconcile, clear and settle than the average electronic payment, according to Payments Canada. And these costs are significant- ly higher when one or more hand- written signatures are required on the cheque. By reducing or eliminating the need to issue paper paycheques, companies save the costs of paper cheque forms, paycheque window envelopes, ink and postage. Addi- tionally, millions of cheques are lost and stolen each year. e average cost to replace a paycheque is US$8 to US$10, ac- cording to the American Payroll Association. Getting started ere are no large infrastructure costs for businesses to begin of- fering payroll cards as an option. Companies simply enrol in a pay- roll card service. Employees then have the choice to enrol in the payroll card pro- gram and have all or just a por- tion of their earnings deposited onto a card. A payroll card is a form of deposit account and has an as- sociated routing/transit/account number in addition to the pay- ment network card number. is information is entered into the employer's payroll system to facilitate a direct deposit to the card account. Following required ID verifica- tion and enrolment, the payroll card provider issues the card, de- livers it to the employee, and noti- fies the employer of payroll card activation. The systems and processes are in place today to make these electronic payments available to employers and employees of all types. Peter Read is president of Peoples Card Services in Vancouver. For more information, visit www.peoplestrust. com/en/peoples-card-services. Work changes driving demand Payroll cards give consumers real- time, up-to-the-minute snapshots of their balance and card spending, often via an online portal or app. PAYROLL < pg. 23 Credit: Teerasak Ladnongkhun (Shutterstock)

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