The Evolution of Pay: Do You Remember Paper Checks?

The-Evolution-of-Pay-Do-You-Remember-Paper-Checks

Payday has long been a physical testament to show gratitude to hard-working employees. Every other Friday, like clockwork, paychecks were handed to an employee as a way to say thank you for putting in the time, effort, and attention for the prior two weeks.

 

However, as the businesses have collectively gone more “green” and advancements in financial technology and security have increased, the physical paycheck has slowly found itself on the sidelines of bi-weekly celebrations. 

 

Let’s take a glance at the evolution of the beloved paycheck.

 

Why has the way we pay our employees changed?

Amidst the Second World War, Congress introduced the current Tax Payment Act of 1943, which familiarized businesses with the necessity of withholdings and quarterly tax payments. This introduction changed the regularity of employee payment. Although employers had no caps on the frequency in which they paid their employees, the calculation of withholdings now made the payroll process more time-consuming than ever before. 

 

Fast forward 25 years, and in 1968, a group of California bankers grew concerned over the volume and security of paper checks being administered and formed the Special Committee on Paperless Entries, or SCOPE. The formation of SCOPE quickly led to the 1972 establishment of the first ACH association in California. This group aided in handling electronic payments and quickly developed national rules regarding ACH standards for Direct Deposit. 

 

Advancements in technology, coupled with newly established local and federal guidelines, flipped payroll from a physical, bi-weekly (bi-monthly, monthly, etc.) event to an automated practice. In light of this, our expectations for immediate gratification have grown to what we now know paychecks to be today. 

 

The future of payroll

Americans-receive-their-paychecks-through-direct-deposit

Being paid on-time and securely are two of the biggest concerns for employees, while efficiency and accuracy are two heavy hitters for employers. According to a survey performed by National Payroll Week, over 92% of Americansreceive their paychecks through direct deposit, making it the preferred method of payment for both employees and employers alike. 

 

Fortunately, timeliness, accuracy, efficiency, security, and more can be achieved with an automated payroll solution. By incorporating a cloud-based, integrated payroll software, your business can accurately calculate employee pay, overtime, and withholdings, while never missing a payday. 

 

Schedule your free consultation to see how the future of payroll can benefit your business today!

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