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Payroll Cards Gain Ground as a Payroll Option
By David Sturdivant, Pinnacle's Manager of Treasury Management Services

An increasing number of financial institutions (Pinnacle included) have added payroll cards to their array of services in recent years, largely to provide a way for businesses to pay employees electronically even when the employee has no banking relationship.

Payroll cards act like ATM/debit cards, allowing employees to access their pay through an ATM or by making point of sale purchases where they can also get cash back. Because of the benefits to businesses, their employees and financial institutions, the number of payroll cards being used has gone from 0 in 1998 to roughly 2 million in 2004.

Benefits for the employer and employee center on cost and convenience:

A recent FDIC report shows that direct deposit of payroll costs employers about $.20 per employee, while each paper check costs $1 - $2 to process. The cost of payroll cards lies somewhere in between, making cost savings a key driver in the growth of payroll cards. That same report indicates that the employees' cost on payroll cards ($79.40 national average) is slightly less than for a basic checking account ($72.00) but considerably less than using a check cashing service ($268.48).

For banks, payroll cards provide an added revenue stream through fees charged to either the business for the service or to the employee for transactions. They also allow the financial institution to deepen its relationship with business clients.

Pinnacle recently began offering payroll cards a way for business clients to use electronic payment options for more of their payroll.

For more information on payroll cards, contact David Sturdivant, Pinnacle's manager of Treasury Management services at 744-3726 or david.sturdivant@pnfp.com.

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