When employees are unbanked — i.e., they don’t have bank accounts into which your organization can deposit their wages — they’re more likely to quickly jump ship for another job.
To serve the nation’s 56 million citizens who don’t have traditional bank accounts, more organizations are using cards. Payroll cards operate like debit cards by allowing employers to credit the wages of employees directly to the cards. Payroll cards have been shown to cut payroll-processing costs by eliminating check processing and expanding the use of direct deposit.
Now these reloadable cards are being credited with reducing employee turnover as well.
Employees without bank accounts are twice as likely to remain with their employers if they are offered a payroll card benefit, says a study by Marlin Financial Services.
To encourage employees to sign up for payroll cards:
- Identify unbanked employees. Nearly 80 percent of unbanked employees earn less than $25,000 a year. Target your promotional materials to employees at that pay level.
- Encourage Hispanic and other immigrant employees to use payroll cards. The National Council of La Raza, a Latino advocacy group, estimates that 35 percent of Hispanics in the United States don’t have bank accounts.
- Explain the financial benefits. Payroll cards could save those without bank accounts up to $270 in check-cashing fees each year. Caution: Some ATMs charge fees, and some payroll cards charge penalties when users overdraw them. Card providers are required to disclose any fees associated with using the cards.