The move to card and electronic payments and away from checks is continuing not only in the consumer sector, but also in payments to employees as private companies and card issuers seek to take more of the market share away from credit card processors.
Clareon Corp. recently launched application of its electronic payment product, PayMode. PayMode for Reimbursement helps businesses reimburse employees for travel, entertainment and other business-related expenses directly from the accounts payable systems. Employee reimbursements are then made during a company's regular payment cycle directly from their accounts payable system, rather than as an additional activity.
Companies using this system also can take advantage of PayMode's online reporting functionality to review payment and remittance data and for employees to track the status of their payment. Employees receive e-mail notification about whether the funds have been reimbursed, which can be a huge benefit if an employee is awaiting payment and traveling on the road.
MasterCard International has also entered the workplace payment area through its MasterCard Workplace Solutions, a comprehensive suite of flexible payment programs that enable member financial institutions to offer their corporate customers non-check method of disbursing funds.
The first program to be rolled out will be the MasterCard Payroll Card, which enables employers to distribute wages to employees on a payment card as an alternative to issuing payroll checks.
The MasterCard Payroll Card integrates with current payroll processing systems managed by third-parties enabling organizations to manage all or most cost-related functions through the payroll processor.
The organization achieves lower administration costs and avoids the costs associated with replacing lost or stolen checks the top two factors cited as the reasons for interest in payroll cards among corporations and public sector organizations, according to MasterCard research.
Though the first banks to offer the cards are among the nation's largest financial institutions, community banks, including Texas First Bank in Texas City, Texas, are also looking at the cards as a profitable alternative to checks.
According to independent research, U.S. consumers were paid more than $5.1 trillion in compensation expenses in 2001.
A significant portion of the payments to more than 130 million workers in America were made via check more than 180 million checks due to employees' lack of banking relationships, temporary employee status, or remote locations. Market research also indicated that an estimated 15 million U.S. households, including approximately 7 million young adults between the ages of 16-19 receiving their first paycheck, have no banking relationships.
"First Bank offers the MasterCard Payroll Card to its business customers because we truly believe the solution will help businesses of all sizes receive operational cost savings as well as enhanced employee productivity," said Jeffrey Ungerott, Senior Vice President at First Banks, Inc. "Employees will receive the benefit of accessing their compensation in a form that is safer and more cost effective than traditional paper checks."
"Comdata is known as a leading provider of electronic payroll funds distribution for retailers and transportation companies around the world, so the MasterCard Workforce Solutions offering will certainly broaden our reach and enhance our current capabilities," added Don Hopwood, senior Vice President of Payment Services for Comdata.