ADP's Global Cash Cards acquisition raises employee end-user questions
- ADP has acquired Global Cash Card (GCC), signaling a huge shift in the payroll processing space. GCC offers paycards and other electronic payment accounts, allowing employers to pay workers with cards instead of paper paychecks or electronic deposits. ADP said in a company blog that digital payments will be less expensive for employers, 73% of whom it says handle Form 1099 documents manually. ADP will manage more than 4 million accounts with the new platform.
- GCC provides employees with a digital bank account linked to their paycard, according to MarketWatch. Employees don't need a traditional bank account to use the card. However, if they use an ATM outside GCC's network, they're charged a fee for the service. Also, consumers don't earn interest on paycard accounts.
- Some employees already have complained about paycards, like a McDonald's employee in Pennsylvania who sued the company behind the fees, says MarketWatch. The card charged the employee $1 to check her account balance and $1.50 for an ATM withdrawal. Since then, the Consumer Financial Protection Bureau (CFPB) has set restrictions on the use of paycards and requires employers to have at least one other payment choice other than the card.
CFPB requires paycard issuers to provide consumers with terms and conditions for using the service. But not all employees are familiar with paycards, and information about the fees and in-network ATMs can be confusing (like many aspects of benefits and compensation). Employers should hold information sessions for employees to explain the use of paycards and associated fees.
These issues are balanced out, however, by the idea that the majority of employees feel empowered and engaged when they can access compensation information online, according to a recent American Payroll Association study.
The thought of being paid without having to cash or deposit a paycheck or have to depend on a traditional bank as a middleman might make workers feel good, but unless they have the information they need to successfully use paycards, any feelings of empowerment and engagement could quickly evaporate. HR will want to pay attention to ADP users' trials in implementing the technology moving forward.