Utilizing Payroll Funding – Debit Cards for Staffing Agencies
Steve Capper – Flexible Funding - July 17, 2017

Everybody knows that the purpose of payroll funding – to pay your temporary employees. The traditional method for temporary staffing payroll has been to issue paper paychecks. A newer method to pay temp employees and contract professionals – one that attracts more applicants – is by the use of debit cards.
Instead of issuing paper paychecks every week, a staffing agency will issue the temp employee a plastic card (like a credit card) and add the amount of pay on to the card or card account number each week.
Staffing Agency Advantages:
- You no longer have to spend time printing up and distributing payroll checks weekly. You just issue a debit card when the temporary is assigned a job.
- These days, checks can be easily forged with a computer and printer. This lessens the chance of an occurrence.
- You attract more applicants because of the advantages to the temporary employees (listed below in Temporary Employee Advantages). You attract more applicants for hard to fill job orders in light industry and nursing.
- With debit cards you can offer more than your competition with no real increase in costs. This allows you to advertise daily pay through a debit cards.
Temporary Staffing Employee Advantages:
- The money is more immediately available to the employees. They are not waiting for a check in the mail. They don’t have to run to the bank to cash a check, when there’s time in their schedule to do so.
- As much as 30% of employees, in some regions in light industry, don’t even have a bank account – debit cards provide more payroll options. Employees no longer need to utilize check cashing services, which take 3% of net pay.
- They can swipe their card almost anywhere and get anything, including cash. Charges are as low as $0.25 per transaction.
Staffing Agency Disadvantages:
- When you load up a temporary employee’s debit card with payroll, funds are moved out of your bank account immediately and moved into the debit card holder’s account immediately. When you issue paper checks, a few employees will carry the checks around for days or weeks before cashing it. This allows you to have the funds in your bank account (until they cash it) earning interest. With debit cards you lose the float.
- It has been reported that some retailers will only let a debit card holder take a specified maximum amount of cash (in one transaction). And the fee, occasionally, can be high.
Shopping For Payroll Cards:
When shopping for payroll cards for your business there are many things to consider.
1. Make sure the payroll card vendor is financially sound. If a payroll card company goes out of business, your employees could lose the pay which is remaining on their payroll cards. The employees might expect you to make up the difference. If the card is set up with FDIC insurance, the employees may be protected if the payroll card issuer goes out of business.
2. Determine or negotiate the monthly fee on the employees. It is best that there are zero fees or no costs to the employee. Also determine the level of access to ATMs, and all ATM charges and fees. Know if, or when fees can be added or increased. Some examples of fees besides a monthly fee include: a charge after a specified number of transactions, a POS or point of sale fees, an inactivity fee, a card replacement fee, a load fee when funds are put on the card, or a fee to get the funds out if somebody decides they don’t want the card anymore. In some regions, when someone is terminated the pay must be on the card…and not on a paper check.
3. What are the consumer protections? What happens if the card is stolen or if there are thefts or errors at the debit card organization? Is there any way a card could be overdrawn? Ideally a card should have the protections included under the Federal Electronic Fund Transfer Act and Federal Regulation E since July 1, 2007. Federal protections restrict the amount of loss when the card is stolen and protect when there are inside thefts or errors.
4. Are there ever any fees to speak to customer service and are services available in a language other than English? Is the customer service in house or outsourced to India, Mexico, etc.? Lastly, there should be good promotional materials with all the fee schedules for the employees.