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What’s in it for Employers and Employees? Benefits from Adopting Paperless Payroll.

Companies of all sizes are looking for more immediate ways to cut costs and drive efficiency with leaner internal resources. One option to consider is how employees are paid. More specifically, employers looking to cut expenses are actively exploring the benefits of a paperless payroll strategy – and for good reason.

In my previous two blog posts, I talked about how adopting payroll cards can be an efficient way for employers to expand their paperless payroll processes while meeting the needs of an evolving, more Millennial workforce. In this post, I’d like to address the reasons why transitioning to paperless payroll is good for both employers and employees.

Given that approximately one in four Americans has a reloadable prepaid card, it’s clear that employees -- especially those within the Millennial generation -- understand the benefits that prepaid cards, which include reloadable prepaid payroll cards, have to offer. The demand for payroll cards will continue to be fueled from Americans who do not currently have a prepaid card. Research shows that nearly half of those people are open to getting and using one in the future. Employers can leverage this mainstream adoption of prepaid and payroll cards in their overall payroll strategy.

Employees can enjoy significant cost savings and convenient account management benefits from payroll cards vs. a paper paycheck. The Federal Reserve Bank of Philadelphia notes that payroll cards are the most cost-effective transaction accounts available to employees and are approximately 80 percent less expensive than check-cashing services. In fact, certain payroll cards can offer employees minimal fees and immediate electronic access to pay. Self-service tools to help manage payroll card accounts online and on mobile apps are additional benefits that payroll card programs can offer.

When we look at the benefits to the employers, they too can realize significant cost savings and improved payroll processing when employees choose to get paid on a payroll card vs. receiving a paper check. For example, if it costs an employer an average of $5 to pay a single employee via paper check bi-weekly, their annual cost per employee paid by paper check is $130. Alternatively, the cost to pay employees via direct deposit to a payroll card account every pay period is significantly lower and it can help reduce additional costs for stop payments and replacing lost or stolen paper checks.

Payroll cards also can help employers meet wage and hour compliance requirements by delivering wages to employees immediately on pay day via direct deposit. This is especially important for employers that experience frequent inclement weather delays in delivering paper checks by mail to employees. Often these paycheck delivery delays can result in expensive non-compliance fines. Many employers who offer payroll cards to employees who have been affected by paycheck delivery delays can help avoid future compliance fines when employees choose to receive their pay immediately on a payroll card.

It’s becoming easier for businesses to implement payroll cards throughout the U.S. There currently are 26 states that address payroll cards in their wage payment statutes and/or regulations. Connecticut is the most recent example. Its law is effective on October 1, 2016.

Compliance is central to launching and managing a successful paperless payroll strategy designed to deliver cost savings and efficiencies to both employers and employees. It’s critical for your payroll staff to understand the federal and state statutes and regulations that govern paperless pay options. For instance, it may be prudent for your payroll practitioner to learn about legislation like Regulation E of the Electronic Funds Transfer Act, which establishes the rights and responsibilities of those involved with electronic funds transfer systems and the implications for capturing the proper employee consent for electronic pay options. This is just one example of the requirements employers need to monitor, especially in the states where they operate, so they can potentially avoid costly compliance penalties when rolling out a paperless pay strategy.

Launching a successful paperless pay strategy doesn’t have to be scary and you shouldn’t have to go it alone. Employers should make sure they have the right legal resources to remain compliant when pursuing a paperless payroll strategy. It’s equally important to continue to re-evaluate their strategy after implementing it as the legislative landscape is constantly changing.

Paperless pay adoption can be a more immediate solution for companies looking to cut expenses, improve payroll process efficiencies, and attract and retain employees. Once you’re ready to launch your paperless strategy, employers will need:

• a payroll card program provider that can deliver immediate access to pay at low costs to your employees and that can meet their needs for mobile account management to ensure they remain paperless.

• to communicate the benefits of the new payroll card option to all of its employees and not just to those who are paid by paper check.

• to build a payroll team’s knowledgebase on the changing legal landscape to help manage the rollout and maintenance of a successful paperless pay program.


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  1. TD Bank, “New Survey Signals Rising Popularity of Prepaid Cards, Led By Millennials
  2. Philadelphia Federal Reserve Bank, “Consumers’ Use of Prepaid Cards: A Transaction-Based Analysis
  3. The Federal Reserve, “Compliance Guide to Small Entities

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