From cash to checks to direct bank deposits, salary disbursal methods have come a long way as businesses continue to utilize powerful payroll solutions in the UAE and beyond and adopt more efficient ways to pay their employees.
The latest on the scene is the payroll card, a new payment system that’s winning the favor of business owners and their workforce for its cost-effectiveness, convenience and security.
What Are Payroll Cards?
Payroll cards are reloadable debit or prepaid cards that employers issue to their staff. Typically, these cards are tied to the company’s payroll account with a financial institution (e.g., banks or exchange houses) where each employee’s salary is deposited upon every pay cycle.
What Are the Types of Payroll Cards?
In the UAE, as an employer, you can choose between two types of payroll cards for your workers:
Open Loop Cards
- These cards can be used at any outlet’s POS system, online store or ATM locally and globally. They usually bear the logo of international payment networks like Visa or Mastercard. In banks, these cards also show the name of the sponsoring financial institution.
- Nowadays, prominent exchange houses in the UAE offer co-branded, open-loop cards as part of their payroll services in partnership with specific banks.
Closed Loop Cards
- Closed-loop payroll cards, on the other hand, are limited to specific salary withdrawal points — usually those of the issuing institution whose logo appears on the card. They also cannot be used for everyday purchases, online or otherwise.
- For their WPS (Wage Protection System) corporate clients, certain financial institutions in the UAE also issue these cards to enable their employees to withdraw their salaries exclusively from the issuer’s network of branches and ATMs.
What Are the Advantages of Payroll Cards?
If you’re a business owner in the UAE, you stand to gain the following from switching to payroll cards as your go-to salary payment method:
1. Streamlined Payroll Management
The old means of salary disbursement often involved resource-, labor- and time-intensive tasks that together could be a drain on a company’s assets. These include printing and distributing checks, managing physical cash, or transaction fees for every direct deposit. Using payroll cards can help you sidestep all these hassles and their associated costs.
2. Better Record-Keeping
In this digital format, you can effortlessly keep tabs on who is paid, how much and when. In case of any discrepancies or queries from employees, you can quickly refer to your payroll card records (either by accessing them from your wage management solution or by contacting the issuing financial institution) instead of rifling through a mountain of paper receipts.
From a compliance standpoint, electronic records of salary payments should also go a long way in maintaining a clear audit trail and ensuring you abide by local labor laws.
3. Easy Employee Access
Paying your employees their wages correctly and on time is a guaranteed morale boost. Add instant access through payroll cards and top it off with an open loop option, and you’ll have yourself a happier, more productive workforce, especially those who might be unbanked (can’t open a bank account) or underbanked (have limited access to banking services).
4. Increased Security
Where once you had to worry about cash getting lost in transit or checks being stolen, now you don’t have to. Your employees, too, will feel safer for not carrying around their entire month’s earnings on them while commuting home.
In the unlikely event of a lost or stolen card, enhanced security features like PINs, chip technology, and OTPs (one-time passwords) will ensure the employee’s money remains safe. The cards can also be blocked or temporarily frozen by you or your worker in case of suspicious activity.
Start Leveraging Payroll Cards
Digital, cashless payments are the way of the future, and payroll cards can be the beginning of this journey for your business. However, as with any financial solution, be it corporate remittance, foreign exchange or payroll, it’s crucial that you do your due diligence and choose a reputable, experienced partner to make the transition as smooth and straightforward as possible.
