Employer Pay Card Guide

Table of Contents 3 Introduction to pay cards

4 Thebenefitsofpaycardsforyouremployees

6 Thebenefitsofpaycardstoyourorganization

7 Paycardchallenges

8 Pay card best practices

9 Pay card implementation

11 Next steps

A pay card is a prepaid, reloadable card, similar toadebitcard,thatemployeewagescanbeloaded to each pay period.

3

Introduction to pay cards

Payments are loaded electronically and employees need only to activate the cardtoreceivetheirwages.Accesstofundsisimmediate.

Pay cards are issued by a bank, with a license from Visa or MasterCard, and can be used for cash withdrawals at ATMs, bill payments and wherever credit and debit cards are accepted.

4

The benefits of pay cards for your employees

The 2017 FDIC National Survey of Unbanked and Underbanked Households, estimatesthatroughly8millionhouseholdsintheU.S.don'thaveabankaccount(unbanked)andanother24millionhouseholdsareunderbanked,meaningtheyhaveanaccountbutalsousefinancialproductsoutsidethebankingsystem.

Accordingtothestudy,thetopreasonsthatemployeesareunbankedincludenothavingenoughmoneytokeepinanaccount,adistrustofbanksandbankaccountfeesbeingtoohigh.

U.S.employeeswithoutbankaccountsoftenpaychargesof$5ormoretocasheachpaycheck and can also pay fees to check-cashers and bill payers. Pay cards can help employees avoid these expenses.

Prompt, reliable payment

Unlikepaychecks,paycardsareneveraffectedbypostaldelaysortheinabilitytogettoabankorcheckcashingservice.

Convenient access to funds

Forpeoplewhodon'thaveadebitorcreditcard,paycardsoffersimilarconveniences.Employeescanuse them to shop and pay bills online, withdraw money from ATMs, make purchases at point-of-sale machines,booktravelreservationsandmorewithouthavingtocarrylargeamountsofcash.Thesetransactionsmaybesubjecttoadditionalfeesthough.

Accessible to everyone

5

Choice of pay method

Personalizingcompensationandbenefitsletsemployeesknowthatyoucareabouttheirindividualneeds and preferences. Even to those who have bank accounts, choice of pay method can differentiate you from competitors.

Asmuchasyoumayliketopersonalizepay,however,somerulesapply.RegulationE states that employerscan’tmandatetheuseofpaycards.So,ifyouofferthem,you’rerequiredtoprovideanalternate form of payment. In addition, many state departments of labor have their own laws about which methods of compensation are permissible.

Financial tracking and budgeting

Somepaycardsallowemployeestotrackspendingthroughamobileapporwebsite.Theycanviewbalanceinformation,reviewchargesandevensetalow-balancealerttohelpmanagespending.Employeeswithbankaccountscanalsoelecttoputapercentageoftheirpayeachpayperiodintoabankaccount(viadirectdeposit)forsavingsandtherestontoapaycardforspending.

Offeringthechoiceofpaycardscangiveyouarecruitmentandretentionadvantageandleadtoimproved employee performance.

Security and fraud protection

TheElectronicFundTransferAct(EFTA),alsoknownasRegulationE,isafederallawthatprotectsconsumers when they transfer funds electronically. This includes pay and debit cards, automated teller machines (ATMs), and electronic withdrawals from a bank account. EFTA explains how consumers can report errors and lost or stolen cards to limit their fraud liability and recoup penalties chargedmistakenly.

AccordingtoastudyreleasedbyMorganStanleyandconductedbytheFinancialHealthNetwork,“financialwellnessprogramsreduceemployeestress,improveretentionandengagementandhelpacompanystandoutinthemarketplace.”1

6

The benefits of pay cards to your organization

47% of Gen Z workers and 31% of millennials said they would turn down a job iftheycouldn'tchoosetheirmethodofpayment,accordingtoADP'sproprietaryresearch, Paycards: Generational Trends Shaping the Future of Worker Pay.

The Association for Finance Professionalsestimatesitcostsemployers$3onaverageperpapercheck,includingprintinganddistribution.Youcanreducethisbyofferingpaycardstoyouremployees.

Foramoredetailedbreakdownofhowmuchyoucansavewithapaycardprogram,useourEmployer Paycard Savings Calculator.

Increased employee engagement

Flexiblepayoptionsprovidearecruitmentandretentionadvantage.

Bynotincludingalternativestochecksandbankdirectdeposit,yourorganizationrisksmissingout on talent.

Cost savings

7

Pay card challenges

“ Youcan'tjustgiveemployeespaycardsandhopetheywillfigureeverything out on their own," saysGeorgeMavrantzas,VicePresidentofStrategyand ThoughtLeadershipatADP.“Ifanemployeemakesamistakeandgetshit withafee,theymightswitchbacktopaperchecks,evenifthepaycardwas an overall better option. ”

Fees

Sincetheintroductionofpaycards,therehasbeenmuchdiscussionaboutbestpracticesandethicaladministration,particularlyasitappliestofees.Usersmaybechargedformonthlymaintenance,ATMand point-of-sale use, replacement of lost or stolen cards, and balance statements. Fees will vary dependingupontheproviderandthestateinwhichthecardisissued.

Toprovidesomeoversight,theConsumerFinancialProtectionBureau(CFPB)createditsprepaidrule2,whichrequiresyoutodiscloseapplicablefeesandotherdetailstoemployeeswhochoosetobecompensatedbypaycards.Theguidelinefurtherstatesthatyoucan’tforceemployeestoreceivetheir pay via pay card.

Employee adoption

Ifyousetuppaycards,don'tforgetaboutemployeetraining.

Aqualitypaycardprovidershouldbeabletoassistwithyouremployeetrainingsoyoucanachievehighadoptionratesandhelpensurethatemployeesarehappywiththeirchoicetousepaycards.

Inaddition,manypaycardvendorsoffermarketingmaterialstohelpcommunicatenewpaycardplansandencourageemployeeadoption.

8

Pay card best practices

Click here to learn more about how pay cards can help attract and retain today’s workers

Seek to minimize fees

Selectingapaycardcompanywithconsumer-friendlyfeescanhelpensurethatyouremployees keep the maximum amount of their pay. It may also help drive adoption of pay cards and improve employee satisfaction.

Disclose terms of uses

Providecomprehensivetermsofuseandrulesforyourpaycardprogramandallotherpaymethodchoicesthatemployeescaneasilyfindandunderstand.

Comply with jurisdictional regulations

Multi-stateemployersmustcomplywithvaryingstatelaborlaws.Makesurethatyourpaycardvendorcanhelpyoustaycompliantwithregulationsandstatelawswhereyouoperatenowormayoperate in the future.3

Ifyouofferpaycardstoyouremployees,thefollowingpracticeswillhelpyoucomplywithstateand federal laws.

Continue to offer multiple pay options

Federalregulationsprohibityoufrommakingpaycardscompulsory.Makesureyouremployeescanelect to receive their pay another way.

9

Pay card implementation

Becausestatesgovernwageandhourlaws,youshouldalsobeawareof jurisdictionalrequirementsinthestatesinwhichyourbusinessoperates.Again,however, these rules are the same for all electronic pay methods.

Managing your pay card program

Ifyoudecidetoofferpaycardsasapaymentchoiceinyourorganization,youwillneedtomanagecertainaspectsin-house,includingintroducingandeducatingemployeesonthepaycardprogramyouchoose,keepingrecordsofemployeepaymentmethodselections,anddesignatingsomeonetohandleanyemployeequestionsthatarise.

Startup costs

Initialcostsforimplementingpaycardsatyourcompanyvarybyprovider,butthemaincostistypically for employee education materials and startup kits.

Implementation timeline

Mostprogramstakeonlyafewweekstobegin,butimplementationtimesvarybyprovider.

Onceyouhavechosenapaycardvendorandprogram,thevendorshouldsupplyyouwithintroductorypay card information for your employees and appropriate disclosures and opt-in paperwork.

Compliance responsibilities

Yourresponsibilityforpayrolltaxandwageandhourcomplianceisthesameaswithanyotherpayroll method.

In accordance with the Electronic Fund Transfer Act,4youcannotrequirethatemployeeshaveanaccountatacertainfinancialinstitutioninordertoreceivetheirpayoruseapaycard.

10

Introducing pay cards to your employees

Youcanrolloutyournewpaycardprogramthroughyourregularchannelsofcommunication.Followingaresomebestpracticesandkeyitemstoaddress:

• Checkrequirementsinthestateswhereyouoperatetoensurecompliance.Forexample,inGeorgia,

employeesmustbenotifiedaminimumof30dayspriortoanemployerimplementingapaycard

program.

• Testthepaycardfirstwithasmallpilotgroup,suchaswiththegroupthatwillbemanaging

implementationandemployeeeducation,sotheycanprovidefirsthandknowledge.

• Haveacommunicationsplanreadypriortolaunch.Gettherightinternalstakeholdersonboardwiththe

programandannounceandpromoteitbroadlyandconsistently,incollaborationwithyourmarketing

and HR teams if possible.

• Makeadoptioneasy.Launchyourpaycardprogramatatimewhentherearen’totherhigh-priority

initiativesthatmightcompeteforattention.Provideclearandconciseenrollmentmaterialstoyour

employeesandmakesuretheyknowwhotogotoforsupportandquestions.

• Ensurecontinuedsupportforyourpaycardprogrambyincludingitinwelcomeinformationfornew-

hires and in annual open enrollment materials.

Employee training

Educatingemployeesonproperimplementationanduseoftheirpaycardswillhelpdriveadoptionandsuccessofyourpaycardprogram.Thepaycardvendoryouchoosemayhaveemployeeeducationmaterials that you can use.

Trainingshouldbeavailabletocoverthefollowingtopics:

• Gettingstarted:Optingintoreceivewagesonapaycard,settingupyouronlineaccountandmobile

app, if applicable

• Basics on how to access funds, withdraw cash, pay bills, transfer funds and check balance

• Overview of potential fees and costs

• Securityandfraudprotection

• Whotocontactforhelp,atbothyourorganizationandatthepaycardvendor

• Howtochangetoadifferentpayrolloption,ifdesired

11

TolearnmoreaboutADP’spaycardprogram,Wisely™Payvisit:

adp.com/Wisely

Next steps

Whenyou'rereadytoconsiderpaycardsforyourorganization,youhavea

varietyofvendoroptions.Yourcurrentpayrollproviderisaperfectplaceto

start.Iftheydon'tofferpaycards,preparealistofrequirementstohelpyou

evaluatenewvendors.Lookforinsurance,security,compliancesupport,an

implementationplan,employeetrainingprograms,paycardmarketingand

anyothersupportneededtomeetyourgoalsandchallenges.

TheWiselyPay™prepaidcardanddebitVISAorMastercardareissuedbyFifthThirdBank,N.A.MemberFDIC,pursuanttoalicensefromMastercardInternationalorVisaU.S.A.Inc.TheWiselyPay™prepaidcardcanbeusedeverywhereDebitVISAorMastercardisaccepted.TheWisely™DirectcardisissuedbyFifthThirdBank,N.A.MemberFDIC,pursuanttoalicensefromMastercardInternational.TheWisely™DirectcardcanbeusedeverywhereDebitMastercardisaccepted.

1. BetterforEmployees,BetterforBusiness:TheCaseforEmployerstoInvestinEmployeeFinancialHealth,FinancialHealthNetwork, May 2019.

2. CFPBFinalizesChangestoPrepaidAccountsRule.

3. ThinkingAboutUsingPayrollDebitCards?ReadThisFirst,SHRM,2018.

4. FDICLaw,Regulations,RelatedActs.

ADP,theADPlogoandAlwaysDesigningforPeoplearetrademarksofADP,LLC.Allothermarksarethepropertyoftheirrespectiveowners.Copyright©2020ADP,LLC.Allrightsreserved.