Payroll ATM Cards at Hanover, Chemical

Employers Can Set Up Special Accounts; Shorter Teller Lines Seen

Banks are starting to use their automated teller machine networks to reduce the number of noncustomers flooding branches to cash paychecks.

Manufacturers Hanover Trust Co. recently introduced an electronic payroll service for corporations that lets employees, even those without ordinary bank accounts, withdraw their pay using ATMs.

Direct Deposit Is Different

Many banks offer programs under which corporations deposit pay electronically into employees' bank accounts rather than distribute paper paychecks.

But Hanover's program and a similar one recently launched by its proposed merger partner, Chemical Bank, are different and may be the first of their kind.

These programs are partly aimed at large and middle-market companies having many employees without bank relationships. Retailers and other companies employing hourly or part-time workers are examples.

Employees are to be given personal debit cards with which they can withdraw their pay from any ATM in the NYCE or Cirrus networks. In each employee's name the banks would maintain special payroll-only accounts, for which the employer would pay a fee.

Lower Cost, Better Service

Bankers said the benefits are twofold. First, it replaces paper checks with electronic funds transfer, saving the corporation and the bank money. Second, it cuts down noncustomer traffic in branches.

"When we did studies of branch traffic, we saw that a lot of people standing in line on payday were not customers," said Leslie Wollin, vice president of the regional banking division at Hanover. "That takes our resources away from customers, so we began looking for alternatives."

Hanover calls the service Power Access. Corporations forward payroll data to the bank via electronic transmission or magnetic media. Employees using direct deposit have their pay credited to their bank accounts. Noncustomers of the banks will use the debit card to draw cash, either the whole amount of thier paycheck or portions, from ATM machines.

November Test Program

Joan Ragno, assistant vice president for automated clearing house services, said a pilot program with a real estate management firm will begin in November.

"Companies with large numbers of hourly workers, part-time employees or student employees are looking at the service," said Ms. Ragno.

Chemical launched a similar program, called Ready Pay, six months ago. It has signed up 65 companies.

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