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1990 Called, They Want Their Paper Checks Back

Christina Hageny

Christina Hageny

President - Valor Payroll Solutions

Issuing pay checks is something every business with employees is required to do, and for a lot of companies, this is a function that isn’t given a lot of thought. However, what many businesses may not know is that how an employee gets paid can make a big difference in the employees’ experience and offering different methods of pay could even be used as a selling point to attract and retain employees.

Paper Checks

The most basic form of payment for employees is a physical check issued on each payday. This means a check is issued, either handwritten and signed or generated through the organization’s accounting or payroll software. While many banks provide the convenience of being able to deposit checks via a mobile app or cash checks at ATMs, employees still need to go through the hassle of collecting their checks each payday. For employees who have irregular schedules or who might have a significant commute, having to pick up a check can be a huge inconvenience.

If the employer distributes the checks in the mail, there may be delivery delays or lost mail to worry about – not to mention postage costs which can add up over time. Often these paper checks may be misplaced, which means having to contact the bank to place stop payments and re-issuing the checks. This can be a challenge for companies where the authorized person who needs to sign the checks isn’t always readily available. If the checks are processed at a different location such as a central corporate office, or by a payroll service provider, it could mean extended delays for the employee. For employees who rely on timely payment in order to pay their bills, this can be an extremely stressful experience that could ultimately impact their performance at work. Some employees who don’t have bank accounts might find themselves paying a fee to cash their checks.

Direct Deposit

Direct deposit is a common method of paying employees. Typically, this involves an electronic file that is transmitted to the company’s bank with instructions to send the appropriate amounts to each employee’s bank account. Direct deposit can be a very convenient pay method for employees who don’t want to deal with paper checks and going to the bank. Many companies also allow employees to designate percentages or set amounts from each check to hit different accounts, which means employees with multiple bank accounts can save time and skip the task of manually transferring money between accounts.

However, there can be some drawbacks to paying employees via direct deposit. Processing times and availability of funds can be impacted by weekends and holidays, and banks often require lead time of at least one business day in order to guarantee deposits can be processed on a specific date. The time zone and the individual banks’ processing schedules can also impact the timing of payment. These time constraints could put some added burden and stress on a company’s payroll team, who might be rushing to meet deadlines and make careless processing errors, which can sometimes be costly to fix. Direct deposit is also not an option for employees who are unable or who choose not to open a bank account.


Another payment option that employers can use to pay employees is through the use of paycards. Paycards are similar to direct deposit in that they are funded electronically, but don’t require employees to have their own bank accounts. These cards act like debit cards and are usually issued in partnership with a major credit card provider. This gives employees the ability to pay for items using their card, which can be a big advantage, especially for those who may otherwise not have access to a credit or debit card of their own.

Some paycard providers offer added perks such as point programs and special partnerships with vendors and retailers, as well as customizable card designs, much like credit cards issued by major financial institutions. Lost or stolen cards can be easily reported through phone, online, or by using an app linked to the card. Many times the employer will even be able to reissue a new card on the spot if they are equipped with a supply. Employees who are paid via paycard are usually able to access cash through partner banks and ATMs, though options may be limited depending on what is available in the employee’s area. And, similar to physical checks, if the cards are distributed by a central office or a third-party vendor, an employee who misplaced their card could be stuck without easy access to their pay while waiting for a replacement.

Cash Payments

Cash payments are also possible, though not very common with most employers. Keeping large amounts of cash on hand for can increase risk for the business, and potential for error due to clerical errors is high. This method of payment would also require that employees physically go to pick up their pay, which can be time-consuming and inconvenient.

Mobile Wallets

Mobile wallets and peer-to-peer payment systems are a relatively new options that might be used by employers. However, money transfer rules and limits can vary from platform to platform, and there may be added costs to using these systems for payroll. Once funds are received in their mobile wallets, employees might need to wait several days to transfer funds to their bank accounts, or pay fees for instant access.

Regardless of how a business chooses to pay its employees, it’s important to understand the local laws. While some states may allow a business to default to a preferred method of pay, others might dictate what the default method is, and only allow for alternate methods if employee actively opt-in to a direct deposit or paycard program. Some states may also have specific rules around paycards, and not all providers might be designed to be compliant in all states. Requirements for the timing of employee payments can also vary from state to state. Partnering with payroll experts can help ensure compliance with the different localities and make sure your employees are paid accurately and on time. Contact Valor Payroll Solutions today!

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