The recently signed financial regulatory overhaul bill named the Dodd-Frank Wall Street Reform and Consumer Protection Act is expected to reduce the debit card Interchange fees used to support free consumer check accounts. This is on top of the loss of overdraft fee income. As a result, big banks are requiring higher minimum balances to qualify for a free checking and adding other service fees.

What will this mean for employers?  For one, employees may opt to close their traditional bank accounts. And if your employees move from banked to unbanked status, this will impact their participation in direct deposit.  Fortunately, the Dodd-Frank act offered an exemption for reloadable prepaid and government-administered debit card programs. This compromise is an attempt to protect the unbanked from being driven to payday lenders and other non-bank entities for their financial needs.

Employers benefit by introducing paycards as an option to their unbanked employees for direct deposit of payroll. Some employers are using paycards to mandate direct deposit participation. And for good reason. Here are some of the top reasons employers are offering payroll debit cards to employees:

• Decrease costs associated with printing paper paychecks. Direct deposit lowers the costs associated with printing and distribution of paper checks, paper check fraud and escheatment. Since paycard programs are able to work with all payroll systems, employers are able to increase direct deposit participation or achieve 100% direct deposit by implementing payroll debit card programs so they can mandate direct deposit for all employees.
• Offer unbanked employees a way to improve personal finances. Many employees are unable or unwilling to get a bank account. Paycard initiatives benefit employees by helping them avoid check cashing fees, saving upwards of $40 a month. Paycards are safer and more secure than carrying cash and provided access to additional services including online account access 24/7, online bill pay, and money transfer features. By using Moneygram or Visa ReadyLink, employees can also add cash to their card any time. And paycards like the Vantage Platinum Pay card have expanded text alert options for low balance, suspected fraud, zero/negative balance, weekly balance, added funds, signature transactions, and more.
• Complement corporate disaster preparedness plan. The APA encourages direct deposit paycards as a disaster preparedness tool. It's clear how local emergencies make receiving pay on payday difficult or impossible for workers who aren't on direct deposit, but non-local emergencies can also pose a challenge. If something happened in a hub city from which paychecks are mailed or air traffic is grounded, employees wouldn't receive paper pay checks in a timely manner. Across the US, many are forecasting a particularly challenging weather-related year, making the need to implement a corporate disaster preparedness plan that includes payroll imperative. A disaster plan that includes electronic payments for payroll lowers payroll costs while ensuring employees get paid, when they need it the most.
• Support green initiatives. The environment comes out ahead when paper checks are replaced with electronic direct deposit. Every little bit helps and a free paycard offering effectively increases direct deposit while supporting efforts to go green all at the same time. US employers of all sizes are incorporating direct deposit payroll debit cards as an alternative to the costly paper checks and an important component in going green.

Learn more about how implementing the Platinum Pay payroll card program can help you move all your employees to direct deposit by visiting http://vantagecard.com/paycard.