Debit cards are a convenient way to pay for employee expenses. Prepaid debit cards can be used as credit card alternatives. Employers can use direct deposits to enable these card transactions – here are the details about the method.
Prepaid debit cards are like a gift or shopping voucher, you can use them to pay for expenses at a retail store or online, anywhere the merchant displays the logo of the payment processing company. Visa and MasterCard are two of the most well known and widely accepted. This gives employers the ability to use direct deposits to load up the employee debit cards. Read on to discover why this might be a good alternative to corporate credit cards.
Restrictions on debit cards
Debit cards can only be topped up by the account holder. There are numerous restrictions which make it very difficult for another person to send money to a different card. The primary reason is that this method can be used for money laundering. Imagine a terrorist organization providing funds to prepaid debit cards, which can then be used by the card holder to purchase anything, no questions asked.
The difficulty of loading up funds on another persons debit card makes it difficult for employers to provide their employees with easy access to funds. The alternative is direct deposits.
How direct deposits work
Instead of maintaining expense accounts for various employees, which can incur a lot of charges on banking and transaction fees, employers can utilise a simple alternative. By using direct deposits to top up their employees’ debit cards, they avoid the transaction fees of additional bank accounts whilst still paying for employee expenses and salaries. To enable this mode of payment the employer has to apply for a direct deposit form from their bank. The payroll department then takes care of completing and maintaining the banking form to ensure all the employee payments go through smoothly.
These prepaid debit cards can then be used by their employees to make regular purchases through EFTPOS transactions, and to withdraw money from ATMs. The reduced cost of banking fees makes it more attractive for employers to use direct deposit methods to pay for salaries and wages. The employees also benefit from greater convenience of using the cards, as well as saving on transaction fees that would have otherwise resulted from multiple transfers of money.
The key to making direct deposits work is the authorisation from the payroll department, which instructs the bank to make the funds available in the employee debit cards. New owners of prepaid debit cards might want to request a token transfer to $1 to be made into the account, if possible. This will verify that the authorisation is proper and functioning, and the employees can continue to receive their salaries regularly.
