A Comdata white paper
A CFO’s Guide to Paycards
How to take advantage of convenient, paperless payroll
distribution for your workforce
WHITE PAPER A CFO’s Guide to Paycards
Do you know how much money is spent on purchasing and distributing paper
payroll checks each year? It’s more than you might think – a 2010 study by
Towers Watson shows that U.S. companies spend $200 to $250 annually per
employee on paper check disbursement. Multiply this by the number of
employees in your company, and you’ll see that this expense can really add up.
Many companies are dealing with this cost by enrolling in paycard programs. A
paycard is a prepaid card onto which payroll administrators can load funds for
both banked and unbanked employees. Paycards are distributed upon
employment, then automatically or manually loaded every pay period. It is just
that simple.
“Paycards are an industry-recognized best practice for organizations like ours,
with high turnover, a seasonal workforce or a geographically dispersed team…
Our transition to electronic payroll has resulted in annual savings of $125,000.”
– Bob Galofaro, Piccadilly
Why do we need paycards?
The need for paycards is not restricted to one industry or field. Paycards can be a valuable payment method
for any company with any size of workforce. Primary reasons that many leading companies have turned to
paycards, as opposed to paper checks, include:
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Need for an easy, efficient, cost-effective way to distribute funds to employees
According to the American Payroll Association, the average cost to produce and distribute a paper
payroll check is $4.40. When scaled to include your entire workforce, these costs can easily add up.
>
Need for protection against lost or stolen checks, or check fraud
Approximately 4 million payroll checks are lost or stolen each year, and replacement checks can
easily cost $8-10 per check1. The national labor costs associated with investigating and replacing lost
and stolen checks comes out to $48 million annually2.
>
Need for a way to pay unbanked employees
The unbanked and underbanked population in the United States is 80 million consumers, who
collectively receive almost $1 trillion in payments annually. Of those consumers, 27.1 million
consumers have no banking relationship whatsoever3. Finding efficient and accurate ways to pay
these employees has been a struggle for many companies, and turning to paycards has proven to fill
this gap when it occurs.
1.800.COMDATA / comdata.com
© Comdata Corporation. All rights reserved. Printed in USA. Comdata is a trademark of Comdata Network, Inc. and a wholly owned subsidiary of Ceridian Corporation. The Comdata Card
is issued by Regions Bank, pursuant to a license by MasterCard International Incorporated. MasterCard is a registered trademark of MasterCard International Incorporated.
WHITE PAPER A CFO’s Guide to Paycards
>
Need for cost reduction for employees to cash checks
It is expensive for employees to cash checks. Some of your employees may be paying up to $96 per
month to cash checks, buy money orders, and conduct other financial trantions4. As a conscientious
employer, you want to help your staff make the most out of their earnings.
1, 2 Office of the Comptroller of the Currency, June 2005
3 Federal Reserve, 2009
4 Towers Watson research commissioned by MasterCard, 2010
What are the benefits of using paycards?
Companies that use paycards as an integrated part of their payroll systems recognize many benefits. Listed
below are some primary cost-reducing and risk-mitigating features of paycards.
>
Give your employees immediate access to funds.
Because paycards are loaded automatically, employees do not have to wait for distribution or travel
to distribution centers to receive their pay. Employees can withdraw funds from ATMs, or use the
card at any retail location that accepts MasterCard, as soon as funds are loaded onto the card.
>
Reduce the risk of fraud and lost checks.
Employees can carry paycards with them just as they carry any other credit or debit card. The risk of
fraud is reduced because these cards are not passing through multiple sets of hands, nor can they be
used without the employee’s signature or PIN number, which is individually assigned.
“Comdata Paycards are a great product in normal times. But in a crisis situation,
it’s especially valuable to know that you can put money into peoples’ hands, no
matter how many miles away they are.”
– Patrick Dougherty, Tire Kingdom, Director of Payroll
>
Issue and replace cards instantly.
Payroll administrators can simply log in to our online system to assign and load new cards. When a
card is lost, the administrator can easily block the old card and issue a new one to that cardholder.
>
Keep your company running during natural disasters.
Paycards reduce the need for manual check distribution and access to banking centers. This is
important when an office experiences an unforeseen closure and still needs a way to pay employees
at a time when it is most needed.
>
Pay employees without access to a bank account.
Paycards can be particularly useful for businesses with seasonal or temporary employees or for
businesses with underbanked employees. Distributing paycards means less time spent printing and
distributing paper checks, and also gives you an easy way to pay employees without access to a bank
account.
1.800.COMDATA / comdata.com
© Comdata Corporation. All rights reserved. Printed in USA. Comdata is a trademark of Comdata Network, Inc. and a wholly owned subsidiary of Ceridian Corporation. The Comdata Card
is issued by Regions Bank, pursuant to a license by MasterCard International Incorporated. MasterCard is a registered trademark of MasterCard International Incorporated.
WHITE PAPER A CFO’s Guide to Paycards
>
Avoid costs related to distributing paper checks.
Paying employees by paycard eliminates costs associated with printing and shipping paper checks,
and also reduces bank fees and other check costs. The Brock Group, which employs approximately
3,000 employees nationwide, experienced an annual savings of about $120,000 in payroll
disbursement once instituting a payroll program.
> Use cards anywhere MasterCard is accepted.
Allow employees to access funds from over 1 million ATMs and nearly 30 million merchants
worldwide. Employees have the option to withdraw their pay at an ATM or to swipe their cards
anywhere MasterCard is accepted and cash-out at MasterCard banks. Employees can check their
card balances by calling a provided toll-free number or going online.
Summary
Using a paycard solution to pay employees can eliminate the need to use paper checks and add up to
significant cost savings for your company. Paycard programs can be particularly valuable for companies with
temporary, seasonal, or underbanked employees, as no bank account information is needed to disburse pay
by paycards. Paycards are loaded automatically, give employees immediate access to funds, can be replaced
or issued instantly, reduce the risk of fraud, and are accepted at over one million ATMs and any retailer
where MasterCard is accepted. Paycards are a cost-effective way to distribute funds to employees, reducing
expenses for your business and for your employees.
To speak with a Comdata representative about starting your company on a payroll paycard program, please
contact us at 1-800-266-3282.
Why Comdata?
Comdata Paycard Solutions provide a cost-saving alternative to traditional check distribution, helping
companies achieve a paperless payroll environment that reduces processing time while ensuring compliance.
The convenience and flexibility of the card provide an added benefit to employees who might otherwise be
underserved by traditional banks.
Comdata provides 24/7 customer service for customers and cardholders, and a dedicated support team to
guide you through set up, implementation, and to answer questions once your paperless payroll program has
launched. Comdata also offers real-time capabilities for managing your paycard program, and enhanced
reporting to help you analyze and ensure the success of your program.
1.800.COMDATA / comdata.com
© Comdata Corporation. All rights reserved. Printed in USA. Comdata is a trademark of Comdata Network, Inc. and a wholly owned subsidiary of Ceridian Corporation. The Comdata Card
is issued by Regions Bank, pursuant to a license by MasterCard International Incorporated. MasterCard is a registered trademark of MasterCard International Incorporated.