EmployerPay Card Guide

Table of Contents3Introduction to pay cards4The benefits of pay cards for your employees6The benefits of pay cards to your organization7Pay card challenges8Pay card best practices9Pay card implementation11Next steps

Introduction to pay cardsA pay card is a prepaid, reloadable card, similarto a debit card, that employee wages can beloaded to each pay period.Payments are loaded electronically and employees need only to activate thecard to receive their wages. Access to funds is immediate.Pay cards are issued by a bank, with a license from Visa or MasterCard, and canbe used for cash withdrawals at ATMs, bill payments and wherever credit anddebit cards are accepted.3

The benefits of pay cards for your employeesAccessible to everyoneThe 2017 FDIC National Survey of Unbanked and Underbanked Households,estimates that roughly 8 million households in the U.S. don't have a bank account(unbanked) and another 24 million households are underbanked, meaning theyhave an account but also use financial products outside the banking system.According to the study, the top reasons that employees are unbanked include not having enoughmoney to keep in an account, a distrust of banks and bank account fees being too high.U.S. employees without bank accounts often pay charges of 5 or more to cash each paycheckand can also pay fees to check-cashers and bill payers. Pay cards can help employees avoidthese expenses.Prompt, reliable paymentUnlike paychecks, pay cards are never affected by postal delays or the inability to get to a bank orcheck cashing service.Convenient access to fundsFor people who don't have a debit or credit card, pay cards offer similar conveniences. Employees canuse them to shop and pay bills online, withdraw money from ATMs, make purchases at point-of-salemachines, book travel reservations and more without having to carry large amounts of cash. Thesetransactions may be subject to additional fees though.4

Choice of pay methodPersonalizing compensation and benefits lets employees know that you care about their individualneeds and preferences. Even to those who have bank accounts, choice of pay method can differentiateyou from competitors.As much as you may like to personalize pay, however, some rules apply. Regulation E states thatemployers can’t mandate the use of pay cards. So, if you offer them, you’re required to provide analternate form of payment. In addition, many state departments of labor have their own laws aboutwhich methods of compensation are permissible.Financial tracking and budgetingSome pay cards allow employees to track spending through a mobile app or website. They can viewbalance information, review charges and even set a low-balance alert to help manage spending.Employees with bank accounts can also elect to put a percentage of their pay each pay period into abank account (via direct deposit) for savings and the rest onto a pay card for spending.According to a study released by Morgan Stanley and conducted by the FinancialHealth Network, “financial wellness programs reduce employee stress, improveretention and engagement and help a company stand out in the marketplace.”1Offering the choice of pay cards can give you a recruitment and retention advantage and lead toimproved employee performance.Security and fraud protectionThe Electronic Fund Transfer Act (EFTA), also known as Regulation E, is a federal law that protectsconsumers when they transfer funds electronically. This includes pay and debit cards, automatedteller machines (ATMs), and electronic withdrawals from a bank account. EFTA explains howconsumers can report errors and lost or stolen cards to limit their fraud liability and recoup penaltiescharged mistakenly.5

The benefits of pay cards to your organizationCost savingsThe Association for Finance Professionals estimates it costs employers 3 on average per paper check,including printing and distribution. You can reduce this by offering pay cards to your employees.For a more detailed breakdown of how much you can save with a pay card program, use our EmployerPaycard Savings Calculator.Increased employee engagementFlexible pay options provide a recruitment and retention advantage.47% of Gen Z workers and 31% of millennials said they would turn down a jobif they couldn't choose their method of payment, according to ADP's proprietaryresearch, Paycards: Generational Trends Shaping the Future of Worker Pay.By not including alternatives to checks and bank direct deposit, your organization risks missingout on talent.6

Pay card challengesFeesSince the introduction of pay cards, there has been much discussion about best practices and ethicaladministration, particularly as it applies to fees. Users may be charged for monthly maintenance, ATMand point-of-sale use, replacement of lost or stolen cards, and balance statements. Fees will varydepending upon the provider and the state in which the card is issued.To provide some oversight, the Consumer Financial Protection Bureau (CFPB) created its prepaidrule2, which requires you to disclose applicable fees and other details to employees who choose tobe compensated by pay cards. The guideline further states that you can’t force employees to receivetheir pay via pay card.Employee adoptionIf you set up pay cards, don't forget about employee training.“You can't just give employees pay cards and hope they will figure everythingout on their own," says George Mavrantzas, Vice President of Strategy andThought Leadership at ADP. “If an employee makes a mistake and gets hitwith a fee, they might switch back to paper checks, even if the pay card wasan overall better option.”A quality pay card provider should be able to assist with your employee training so you can achievehigh adoption rates and help ensure that employees are happy with their choice to use pay cards.In addition, many pay card vendors offer marketing materials to help communicate new pay card plansand encourage employee adoption.7

Pay card best practicesIf you offer pay cards to your employees, the following practices will help you comply with stateand federal laws.Continue to offer multiple pay optionsFederal regulations prohibit you from making pay cards compulsory. Make sure your employees canelect to receive their pay another way.Click here to learn more about how pay cards can help attract and retaintoday’s workersSeek to minimize feesSelecting a pay card company with consumer-friendly fees can help ensure that your employeeskeep the maximum amount of their pay. It may also help drive adoption of pay cards and improveemployee satisfaction.Disclose terms of usesProvide comprehensive terms of use and rules for your pay card program and all other pay methodchoices that employees can easily find and understand.Comply with jurisdictional regulationsMulti-state employers must comply with varying state labor laws. Make sure that your pay cardvendor can help you stay compliant with regulations and state laws where you operate now or mayoperate in the future.38

Pay card implementationStartup costsInitial costs for implementing pay cards at your company vary by provider, but the main cost istypically for employee education materials and startup kits.Implementation timelineMost programs take only a few weeks to begin, but implementation times vary by provider.Once you have chosen a pay card vendor and program, the vendor should supply you with introductorypay card information for your employees and appropriate disclosures and opt-in paperwork.Compliance responsibilitiesYour responsibility for payroll tax and wage and hour compliance is the same as with any otherpayroll method.In accordance with the Electronic Fund Transfer Act,4 you cannot require that employees have anaccount at a certain financial institution in order to receive their pay or use a pay card.Because states govern wage and hour laws, you should also be aware ofjurisdictional requirements in the states in which your business operates. Again,however, these rules are the same for all electronic pay methods.Managing your pay card programIf you decide to offer pay cards as a payment choice in your organization, you will need to managecertain aspects in-house, including introducing and educating employees on the pay card program youchoose, keeping records of employee payment method selections, and designating someone to handleany employee questions that arise.9

Introducing pay cards to your employeesYou can roll out your new pay card program through your regular channels of communication.Following are some best practices and key items to address: Check requirements in the states where you operate to ensure compliance. For example, in Georgia,employees must be notified a minimum of 30 days prior to an employer implementing a pay cardprogram. Test the pay card first with a small pilot group, such as with the group that will be managingimplementation and employee education, so they can provide first hand knowledge. Have a communications plan ready prior to launch. Get the right internal stakeholders on board with theprogram and announce and promote it broadly and consistently, in collaboration with your marketingand HR teams if possible. Make adoption easy. Launch your pay card program at a time when there aren’t other high-priorityinitiatives that might compete for attention. Provide clear and concise enrollment materials to youremployees and make sure they know who to go to for support and questions. Ensure continued support for your pay card program by including it in welcome information for newhires and in annual open enrollment materials.Employee trainingEducating employees on proper implementation and use of their pay cards will help drive adoptionand success of your pay card program. The pay card vendor you choose may have employee educationmaterials that you can use.Training should be available to cover the following topics: Getting started: Opting in to receive wages on a pay card, setting up your online account and mobileapp, if applicable Basics on how to access funds, withdraw cash, pay bills, transfer funds and check balance Overview of potential fees and costs Security and fraud protection Who to contact for help, at both your organization and at the pay card vendor How to change to a different payroll option, if desired10

Next stepsWhen you're ready to consider pay cards for your organization, you have avariety of vendor options. Your current payroll provider is a perfect place tostart. If they don't offer pay cards, prepare a list of requirements to help youevaluate new vendors. Look for insurance, security, compliance support, animplementation plan, employee training programs, pay card marketing andany other support needed to meet your goals and challenges.The Wisely Pay prepaid card and debit VISA or Mastercard are issued by Fifth Third Bank, N.A. Member FDIC, pursuant to alicense from Mastercard International or Visa U.S.A. Inc. The Wisely Pay prepaid card can be used everywhere Debit VISA orMastercard is accepted. The Wisely Direct card is issued by Fifth Third Bank, N.A. Member FDIC, pursuant to a license fromMastercard International. The Wisely Direct card can be used everywhere Debit Mastercard is accepted.1. Better for Employees, Better for Business: The Case for Employers to Invest in Employee Financial Health, Financial HealthNetwork, May 2019.2. CFPB Finalizes Changes to Prepaid Accounts Rule.3. Thinking About Using Payroll Debit Cards? Read This First , SHRM, 2018.4. FDIC Law, Regulations, Related Acts.To learn more about ADP’s pay card program,Wisely Pay

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The Wisely Pay prepaid card and debit VISA or Mastercard are issued by Fifth Third Bank, N.A. Member FDIC, pursuant to a license from Mastercard International or Visa U.S.A. Inc. The Wisely Pay prepaid card can