An employer often arranges for a payroll card to be issued to its employees as part of an employee benefit program. The employee's pay is deposited directly onto the payroll card instead of paid by check or directly deposited in the employee s banking account. This type of payment is often less costly when processed electronically and allows the employer to avoid various fees. Some employers use payroll cards to pay for their employees' telephone and other office expenses.
A payroll card, also known as an EIN (Employer Identification Number), is a number that can be used to prove the identity of an employee. This number must be applied to all checks the employer issues and pays to its employees. Because the number is not available to the employees directly, it is necessary for the employer to obtain this number from an electronic clearinghouse such as World Wide Web, via an Internet connection. The number is then encrypted so it cannot be read by anyone but the owner of the EIN.
When the employer deposits the amount of cash directly into the employees' bank account, it is called direct deposit. Direct deposit helps the employer to avoid one of the costs associated with printing and issuing payroll cards printing and postage. Direct deposit also avoids the inconvenience of having to maintain two separate bank accounts for the paycheck of each employee.
Some employers also use Paychex payroll cards to issue travel or expense reimbursements. The concept of payroll card transactions has been around for years, but not until recently has it become commonplace in most businesses. An employee is issued a card that contains all of the information necessary to complete an online transaction, including his name, address, routing number and other relevant information regarding the payroll card. These types of PayActiv cards provide all of the data necessary to deduct the employee's tax payments from the bank account each pay period. The deductions are usually applied to the employee's tax refund.
The fees associated with payroll cards vary from company to company, but often include a service fee, transaction fee or ATM surcharge. The service fee can be a flat monthly fee or an hourly rate. The ATM surcharge can be a flat fee or an hourly rate. The transaction fee covers the cost of obtaining a pre-note and printing a custom payroll card for each employee. There are also no grace periods, so if an employee doesn't deposit all of their fees by the due date, they will incur an additional transaction fee.
Most payroll cards have features that allow them to be used with online processing services such as e-Checks and World Wide Web check applications. The electronic deposit of taxes allows for easy payroll card processing at the workplace. No longer must an employee to carry around a check book and paper that need to be processed regularly. No longer must an employer to carry cash to deposit checks. Now it is just a matter of a few minutes, when the payroll card is swiped at the computer, and the information is sent electronically to the employer.
For more info related to this article, click this link: https://en.wikipedia.org/wiki/Payroll_automation.