Ecount News & Press Releases

Electronic Payroll : Cashing in on E-Transfers

Retailers deposit wages automatically to employee paycards

April 2006, By Connie Robbins Gentry

For many store managers, payday is a source of countless frustrations and interruptions. When checks are manually distributed to each employee, both the manager and the associate have to take time away from their jobs to accomplish the hand-off.

With more than 1,400 employees, U.S. Restaurants, which owns and operates more than 40 Burger King restaurants in the Philadelphia market, encountered this problem every week as each store manager dealt with as many as 50 personnel interruptions on payday. Thanks to an electronic-payment platform from Conshohocken, Pa.-based Ecount, the Burger King franchisee found a way to eliminate the time-consuming process and let each employee "have it their way " when it came to receiving their weekly wages. Instead of visiting a manager's office to collect a paycheck, restaurant employees receive automatic deposits on individual debit cards, providing the equivalent of cash in their pocket when they wake up on payday.

In addition to improving store-level operations at these Burger King locations, the electronic-payroll system also relieved the corporate office of the burdensome payroll processes associated with issuing paper checks.

Like the fast-food king, department store retailer Stein Mart (Jacksonville, Fla.) wanted a more efficient system for dispensing its payroll. With more than 260 stores in 30 states and a weekly payroll distributed to between 15,000 and 17,000 employees, reducing the time store managers and corporate personnel spent processing paychecks was certainly advantageous. However, the real motivation for converting its manual, paper system to automatic electronic transfers was Stein Mart's commitment to deliver employees' pay on time regardless of unforeseen and uncontrollable events.

D. Hunt Hawkins, Stein Mart's senior VP, human resources, explained, "The first time we encountered widespread difficulty delivering our payroll was following the Sept. 11 terrorist attacks when air traffic was suspended and UPS was unable to deliver paychecks to our stores. A couple of years later, a snowstorm shut down the UPS hub in Louisville, Ky., and our payroll was stranded again. Fortunately in July 2005, we implemented the electronic-paycard system from Ecount."

It was a just-in-time strategic maneuver. The next month, Hurricanes Katrina, Rita and Wilma impacted 20 Stein Mart locations, displacing hundreds of Stein Mart employees. Associates who had signed up for the electronic-paycard system had uninterrupted access to their earnings, which the company continued to deposit into their personal accounts even while stores were closed. They could access their money at any ATM machine or pay for purchases with the debit card.

Direct-to-wallet deposits: In some ways, the electronic paycard mirrors a direct-deposit system. However, in the aftermath of Hurricane Katrina, financial institutions throughout the Gulf Coast remained closed for extended periods, making the wages deposited to personal bank accounts difficult to access. Conversely, deposits to the paycards were available without interruption. Stein Mart employees in the Gulf Coast region who were using direct deposit and had not registered for the paycard program were issued cards within days of the disaster.

Additionally, the paycard system is ideal for employees who would not be eligible for direct-deposit services because they do not have bank accounts.

Three weeks after the July implementation, Stein Mart had completely stopped issuing paper checks, and the electronic paycards have continued to meet all of the retailer's expectations. "We have not seen a downside to this process, " reported Hawkins. "And we expect to realize savings of about $100,000 a year since we converted from paper checks to electronic deposits."

Additionally, Stein Mart is able to utilize HR manpower more efficiently and has transferred one of its payroll associates to the employee-benefits department. The proprietary platform selected by Stein Mart integrates seamlessly with any existing payment-processing network and is compliant with every state's wage-and-hour laws.

One of the key concerns was how to convince all of its employees to adopt an electronic-payment option. Stein Mart partnered with Atlanta-based Personal Communications Inc. (PCI), to script and deliver information to its associates. Over a 10-week period, PCI educated more than 75% of Stein Mart's work force at in-store meetings.

"PCI did a great communications job for us, and our employees embraced electronic payments, " reported Hawkins. Prior to the PCI meetings and Ecount rollout, only 40% of Stein Mart employees used direct deposit. Now all wages are delivered 100% electronically, either by paycards or direct deposit. Several associates, including Hawkins, use a combination of the two options, with a portion of wages deposited to their bank account and a portion to a paycard. Looking ahead, Hawkins hopes to begin using electronic paycards to reimburse employees' travel expenses.