Citicorp is introducing a service to let companies use automated teller machine networks to pay employees who don't have bank accounts.

The PayTM Card, to be introduced at the Treasury Management Association conference next week in New Orleans, is intended to reduce the number of people cashing checks at Citibank branches, and to help companies cut their payroll administration expenses.

"Especially in New York, on Fridays or Wednesdays, or the 15th or 30th of the month, we get extremely long lines for check cashing," said Maureen Kelly, a product manager in New York for Citicorp's global cash management services unit, which developed the PayTM Card.

Citicorp is marketing PayTM to companies that in turn will offer it to their employees.

A pilot program is now under way with a "national employer" in New York that Ms. Kelly declined to name.

The PayTM card is scheduled to be available throughout the country in January.

Employees who agree to use the card will have their paychecks electronically deposited into a special, interest-bearing demand deposit account at Citibank.

But the employees will not be able to write checks to get at their money, or to withdraw their money from a branch.

Instead, they will be given a PayTM Card that they can use to withdraw part of all of their money from Citibank ATMs, or from ATMs and point of sale debit devices hooked into the national Cirrus network and leading regional networks, including Star and Honor.

Citibank will mail the employees monthly statements with their account balances.

The employees will also be able to call customer service representatives around the clock to ask questions.

Employees will be able to make a number of PayTM withdrawals free.

Seen As Cheaper, Easier

The exact number of withdrawals will vary by employer. But the employer will pay a fee based on the number of paychecks deposited into the PayTM accounts.

Citibank hopes that employees who don't have bank accounts would rather be paid through the PasyTM service than with a paper paycheck.

The idea is that PayTM will be cheaper and easier to use than check-cashing services.

Companies are supposed to save money by printing fewer checks, and avoiding the fees banks and check-cashing companies charge to cash employee checks.

Ms. Kelly said that the company in the test expects to cut its payroll administration costs by a third by printing fewer checks, and avoiding check-cashing fees.

To make PayTM more attractive to employees, Citibank has developed what it calls a Holiday Savings Plan.

With this service, a portion of an employee's paycheck can be put into a savings account, which is moved into the PayTM account just in time for the holiday shopping season.

Chemical Had Similar Idea

In the pilot, both the PayTM and Holiday Savings accounts pay an 3% annual interest rate.

In the commercial rollout, the PayTM account is expected to pay interest of 2.5%, while the Holiday Savings account will pay 3%.

Citicorp is not the first bank to introduce a paycheck deposit service of this sort.

In spring 1992, Chemical Banking Corp. introduced a similar service called Ready Pay.

Nine months after introducing the service, Chemical officials said they had issued about 4,000 Ready Pay cards to employees of abouut 180 companies in the New York area.

Ready Pay cardholders can get their cash fron bank tellers in an emergency, a feature that Citicorp is considering adding to its PayTM card.

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