Indemnity payments to injured workers are met with many challenges. Today’s increasingly mobile workforce, a need for greater security, and the desire to lower overall costs may have you considering a modern and flexible payment solution. A bank-neutral debit card may be the answer for these issues:
1. Mobile Workforce
Workers in the United States are more mobile than ever before. Consider these stats:
- 3 million – The number of migrant and seasonal workers in the U.S.1
- 3.5 million – The number of truck drivers in the U.S., a number that is expected to grow2
- 79% – The percentage increase in workers who worked remotely between 2005 and 20123
Many of those workers don’t live near their home bank and if they get hurt on the job, they need a way to receive workers’ comp payments. If a worker receives a check, he or she either has to mail the payment to be deposited (slowing down payment time), or use an expensive check-cashing service that charges a hefty fee. Also consider that a person who is frequently on the move may change banks often, which could lead to a payment processed through EFT never reaching its destination.
With a reloadable, bank-neutral debit card, the worker can access his or her funds immediately without incurring steep convenience fees. The card can be used in most places that accept MasterCard® or Visa® for groceries, bills, or other necessities.
Using checks or EFT to disburse funds makes payments and sensitive information vulnerable to fraud. Many mobile workers lack a permanent mailing address, leaving payments open to escheatment or lost and stolen payments. For EFT payments, a worker may not be willing to share bank information, especially after recent high-profile incidents of private consumer data being stolen and leaked.
Conversely, with a preloaded debit card, a worker receives the card and registers it one-time through a secure web portal. The chances for fraud and escheatment are greatly reduced.
It can cost up to $8.00 to process a check, per transaction.4 If 10,000 checks are processed in a year, it could equal $80,000 in administration fees alone. That doesn’t include costs for postage and printing. Furthermore, an increase in injury severity could lead to an increase in payment duration, meaning more checks to write and process. Cost control can quickly get out of hand when using a check as a payment method.
Another thing to consider is that fraud on workers’ compensation costs approximately $7.2 billion each year, according to the National Insurance Crime Board.5
Other cost concerns include the amount of time a company spends answering phone calls and responding to upset workers who haven’t received their payments. Locating the payment and determining its status, and/or cutting and resending payment can all add up in lost time and wages for payers.
In comparison, the cost of sending one reloadable debit card greatly reduces processing, postage, and handling fees for the payer. Plus, with lower chance of fraud, the less time and money spent on recovering and resending a compromised payment.
Now is the time to reconsider how indemnity payments work and how much they cost in total for your company and your workers. Using an account-linked, bank-neutral debit card could be the right solution for making the process more affordable and efficient, and increasing satisfaction on both sides of the equation.
DataPath’s RenewCard is a bank-neutral, card payment solution that is powered by MasterCard. The secure and flexible RenewCard can be used for workers’ comp payments, or as payment for other types of compensation. Learn more about RenewCard today.
- Facts about Farmworkers, National Center for Farmworker Health, 2012
- Trucking statistics, Truckinginfo.net, accessed March 2015
- Tugend, Alina, “It’s Unclearly Defined, but Telecommuting Is Fast on the Rise,” New York Times, March 7, 2014.
- “2013 AP Automation Study,” The Institute of Financial Operations, July 2013
- National Insurance Crime Bureau, NICB.org, accessed January 2015