Paperless Payroll: Benefits of Electronic Pay

Is your company still clinging to the outdated practice of paper checks? Businesses should consider joining the growing number of organizations embracing the efficiency and security of electronic pay options. Not only will you streamline your payroll process, but you'll also empower your employees, contribute to a greener planet, and work towards stronger compliance with payroll regulations.

Benefits of Paperless Payroll

There are various types of paperless payroll processes, as well as various benefits by moving to a digital process when it comes to running payroll. 

Understanding Electronic Pay Options

One of the most important things that every payroll manager should know is that there are two primary methods of paying employees in a paperless fashion. Employers can opt to either use direct deposit or paycards. Some employers may even opt to make both options available to employees. 

Consider ensuring that these options are available when thinking about how to choose a payroll company.

What Is Direct Deposit?

This is the most popular choice, where funds are electronically deposited directly into your employee's bank account on payday. It's convenient, secure, and eliminates the need for paper checks (ABA Banking Journal) (Nacha).

What Are Paycards?

For employees who may not have easy access to a traditional bank account, paycards offer a secure alternative.

These prepaid cards function similarly to debit cards, allowing employees to access their wages electronically and make purchases or withdraw cash at ATMs (Nacha).

What Option Is Best For You?

It is important when selecting a payroll company that you ensure their payroll software offers both direct deposit, as well as the option for paycards. Earned wage access is also a great addition. 

Compliance Benefits of Paperless Payroll

The Electronic Funds Transfer Act (EFTA), also known as Regulation E, allows employers to require direct deposit, but with some key requirements:

• Employee Choice of Bank (or Opt-Out): If an employer mandates direct deposit, they must allow employees to choose the bank account where their wages will be deposited.
• Alternative Payment Method: Alternatively, employers can choose a specific bank for direct deposit, but they must also offer another method for receiving wages, such as paper checks or prepaid debit cards. This gives employees the option to opt out of direct deposit if they prefer (Federal Reserve).

It's important to note that some states have their own regulations regarding electronic pay. These regulations can vary, so it's always best to check your state's Department of Labor website or consult with a human resources professional for the specifics in your area.

Do Employees Prefer Direct Deposit and Electronic Pay?

Paperless payroll options have a great and positive impact on the employee experience at an organization. 

Benefits of electronic pay and the self-service options that come along with it include: 

• Convenience: Employees receive their pay faster and don't have to worry about lost or stolen checks. Nearly 93% of employees prefer to access their wages on their own terms, highlighting the growing demand for flexible payment options (Nacha).
• Security: Both options eliminate the risk of payroll fraud and attempts at fake direct deposits, and ensure your employees receive their hard-earned wages safely. Check fraud cases have surged, with significant increases in check-related crimes reported by the USPS (ABA Banking Journal). This is a huge benefit in today's age of employee data privacy and a need to keep HR data secure. 
• Efficiency: Your business saves time and resources associated with printing, signing, and distributing paper checks. Additionally, ACH payments eliminate the need for shipping fees and reduce the time spent waiting for checks to arrive, providing significant cost savings (Nacha).
• Accessibility: Direct deposit caters to most employees, while paycards offer a viable alternative for those without traditional bank accounts.
• Transparency: Self-service portals, accessible through mobile devices or web browsers, allow employees to view their pay stubs anytime they need and understand their deductions and taxes better.
• Environmental Benefits: Eliminating paper checks reduces paper waste, promoting eco-friendly business practices. The environmental impact of reducing paper usage is substantial, as it helps conserve natural resources and reduces landfill waste (Nacha).

Get Started With Paperless Payroll

Modernizing your payroll system with electronic pay and self-service portals offers a wealth of benefits for your business and your employees, and when comparing a PEO to a payroll service, it often feels like the right choice. It's a win for everyone – greater convenience, increased security, environmental responsibility, and a happier workforce.

Ready to ditch the paper and embrace the future?

Start searching for a payroll company that can help you implement these modern payroll solutions seamlessly today! Contact us today for a free consultation and learn how we can streamline your payroll process!