One of the most crucial processes of running a business is paying employees accurately and on time. Paperless wage payment is increasingly more common. Many employees opt to use direct deposit to receive their paycheques because of its convenience and reliability. However, there are other digital payment methods employers can use to pay their staff.
In this article, we’ll discuss the different types of electronic payment methods available for employees. We’ll also provide some benefits of offering these payment types to help you decide which options are best for your employees.
Electronic payment methods are contactless, paperless, and cash-free ways to pay a person or a business. Electronic payment options are quick, safe, and convenient. More individuals and companies are moving away from traditional payment methods like cash and paper cheques.
TYPES OF ELECTRONIC PAYMENT METHODS
Direct deposit is the process of transferring funds into a bank account electronically. Employers can use electronic funds transfer (EFT) or Automated Clearing House (ACH) transfer for direct deposit. Direct deposit is by far the most popular method of electronic wage payment, with over 99% percent of employers offering this option. Pros: Funds are transferred instantly, minimizing wait times for employees. Banks generally don’t charge fees to receive transfers. The transactions leave accurate, easy-to-access records, making it easy to rectify mistakes or missing funds.
Cons: Employees must have a bank account. Authorization for direct deposit and setting up new employees can take a few weeks.
Pay Cards are a relatively new option that allows employers to pay workers in the form of pre-paid debit cards.
Pros: Workers get immediate access to their funds without needing traditional bank accounts. A pay card can be used as a debit card to buy groceries, receive cashback from purchases, and make ATM withdrawals. Some cards also allow employees to pay bills with them.
Cons: Cards are easily lost or stolen, and workers who need cash will be subject to ATM fees.
A digital wallet, or e-wallet, is an online system that stores an individual’s payment information and passwords for various websites and payment methods. Users can store funds, make transactions, and view payment histories from their computers or mobile phones.
PhonePe was launched in 2015 which is now a part of Flipkart. From UPI Payments to mobile recharges, money transfers to online bill payments, this can be done on PhonePe. With a user interface, it has offered the safest and fastest online transaction experience in India.
Advantages of offering electronic payment options:
- This can decrease time spent on payroll, reduce operational costs, payout benefits, and prevent employee pay delays.
- This automation saves time on paperwork and reduces bank transaction times, enabling HR to process payroll more efficiently.
- Employers can distribute anything that requires cash compensation electronically, such as bonuses, mileage, and meal allowances.
- Removing bank service charges, payroll fraud, and headcount costs for payroll administration
- Improving productivity, as employees won’t have to spend time at the bank during business hours. An SMS from the bank confirms the receipt of the salary deposited in the account.
- Implementing paperless payroll at little to no overhead, as many payroll software providers offer to set up this process at zero cost
