Mitigating Payroll Distribution CostsThe “Pay-to-the-Penny” Panacea forEmployers and Employees Nationwide
Millions of people conduct their financial business outside thebanking system, and businesses are sharing the ramificationsof this 21 st century reality.According to a December 2009 survey by the Federal Deposit Insurance Corp., nine million households areunbanked, and another 17.9 million households are underbanked. According to 2010 estimates by the Aite Group,32% of bill payments by unbanked and underbanked consumers are made by check, 30% by cash and 21% bymoney orders. Unbanked or underbanked – what is the significance of these classifications and statistics?For millions of employees and their employers, resistance tothe digital infrastructure available in the intersecting worldsof banking and payroll administration has cost our nation’sworkplace billions of dollars every year.“The use of payroll cards is expanding as companies look tomigrate to paperless payments in order to avoid the costsassociated with issuing paper checks,” said Brian Borneman,vice president, product manager at Bank of AmericaMerchant Services. “The fully burdened costs of employergeneratedpaychecks include courier services, production/printing, bank fees such as positive pay, as well as the time andsecurity measures devoted to physical distribution (includingreplacement for lost/stolen checks). Despite the long historybehind company-generated paychecks, these factors no longerneed to be regarded as an acceptable cost of doing business.”The following snapshot further describes the burden that relianceon paper checks has on employers and their employees:– The approximate cost to process a payroll check is $2.00. 1– Four million payroll checks are lost or stolen each year. 2– Industry studies indicate that employees can spend theequivalent of three workdays each year traveling to a bankor check cashier. 3– Employers producing 10,000 payroll checks/advices permonth could save 7,000 pounds of paper, 65,000 gallons ofwastewater, 2,000 gallons of gasoline, and nearly 1,000 treesannually. 4– Up to 35 million unbanked workers spend $9 billion annuallyon check-cashing fees. 5In general, electronic payroll not only virtually eliminates thesemassive administrative costs, but also promotes the goal ofensuring that individuals and businesses share the same accessto basic, safe and affordable bank services.Of course, many of the unbanked members of the Americanworkforce are using non-banks such as third-party check cashers,payday loan establishments and rent-to-own franchises tofacilitate their financial affairs. Despite the monetary and othercosts associated with these various money service businesses,the unbanked continue to demonstrate their preference for theseproviders over a traditional banking relationship. This leavesemployers carrying the incremental costs associated with paperpaycheck production and distribution — with the efficiency andcost optimization of direct payroll deposit remaining out of reach.“Fortunately, a way to make all payroll distribution completelyelectronic for the employer has emerged over the last 15 years,which is designed to enable employers to comply with payrolllaws while providing a safe and convenient pay alternative foremployees,” added Borneman.Money Network ® SolutionsOne of the most efficient electronic payroll distribution productsin the U.S. today provides free access to pay, even to unbankedemployees. In addition, consolidation of payroll processingresources into a single common infrastructure creates a muchsimpler system for businesses, so they can focus on the productsand services that are core to their success.With the Bank of America-sponsored Money Network ® program,the payroll process is efficiently streamlined and offered throughmore than 55,000 Bank of America and Allpoint ATMs and atleast 5,400 Bank of America banking centers that offer at leastone surcharge-free withdrawal per pay period. This already-popularoption for companies nationwide is the Money Network ® PayrollDistribution Service, which consists of the Money Network Checkand Money Network ® Paycard.The widely recognized migration from paper-based payments toelectronic funds distribution has been occurring on several fronts.Various state governments moved years ago from food stampsand other forms of material aid to electronic benefits transfer,distributing assistance via a plastic debit card. More recently,the U.S. Treasury Department announced on May 1, 2011 thatanyone newly applying for Social Security, Veterans Affairs orother federal benefits will need to choose an electronic paymentmethod, as all paper checks will be phased out by March 1, 2013.The rationale behind the decision is simple and clear: the U.S.Treasury Department stated that the move will save taxpayers$1 billion over the next decade.The Treasury Department had published a final rule in December2010 to gradually eliminate paper checks for federal benefitpayments after more than 540,000 Social Security andSupplemental Security Income paper checks were reportedlost or stolen in 2010 alone.
Money Network ® Payroll Distribution Service– Lowers payroll expense by enabling 100% electronic pay, therebyreducing costs associated with company-issued paper checks– Employees able to choose between direct deposit and the MoneyNetwork ® Service, with access to pay via the Money Network Check and the Money Network ® Paycard– Provides employees immediate access to their payroll funds– Handles exception pay and termination pay– Provides funds secured in an FDIC account– Helps virtually eliminate check fraud– Ensures prompt disbursement of payroll funds– Delivers uninterrupted pay in the event of a disasterMoney Network CheckThis check-generation option is designed to enable companiesto comply with state laws that require paper payroll checks.The Money Network Check option:– Provides full access to net “pay to the penny” withoutemployee fees– Can be cashed for free in all 50 states at nearly any Walmart,Bank of America banking center or other participating location– Can be used as a bill payment tool for utilities, rent and others– Delivers access to funds if the Money Network ® Paycard is lostor stolenMoney Network ® Paycard– Pays for virtually anything without the need for carrying cash– Can be used at any ATM– 55,000 in-network Bank of America and Allpoint ATMs providesurcharge-free cash withdrawals– Enables PIN-debit purchases with the option for cash back– Enables signature-debit purchasesSafe, easy and convenient, Money Network enables 100%electronic payroll distribution to employers. Whether an employeehas a bank account or not, the Money Network makes 100% of theemployee’s net pay fully accessible through the Money NetworkCheck and the Money Network Paycard. This state-of-the-art payrollprogram is transforming the payments landscape by streamliningadministrative functions for employers, providing reliability andunparalleled convenience for employees and substantially reducingcosts for both, nationwide.1“Payroll Cards,” June 2005, U.S. Comptroller of the Currency2“The Guide to Successful Electronic Payments,” 2011, American Payroll Association3http://uscardsource.com/fcomp.php4“The Right Reason for Saving Social Security,” July 21, 2010, The Brookings Institution5“Payday Loans Put Families in the Red,” February 20, 2009, Center for Responsible Lending© 2011 Banc of America Merchant Services, LLC. All Rights Reserved. All trademarks, service marks and trade names referenced in this material are the property of their respective owners.Money Network payroll products are provided by Money Network Financial, LLC. Money Network paycards and checks are issued by Bank of America, N.A. Money Network paycard accounts and checks are FDIC insured deposits.BAXXXX 1011