A common best practice is for companies to avoid paychecks entirely, switching instead to electronic payments. However, some proportion of all employees may not have bank accounts into which funds can be paid. Because of this problem, companies commonly resort to the use of payroll debit cards, for which accounts are created for each recipient.
If a company does not want to use payroll debit cards, or if its payroll processing supplier does not offer such cards, there is an alternative – the Electronic Transfer Account (ETA). The U.S. Department of the Treasury designed ETAs so that people could use them to receive a variety of electronic payments from the federal government. These payments include Social Security, veterans benefits, civil service and military wages, and payments from the Railroad Retirement Board. Banks offering these accounts can be located on the www.eta-find.gov site.
An ETA is highly advantageous, because it does not require a minimum balance, allows at least four free withdrawals per month, and costs no more than $3 per month. Why is this important for a company? Because any employees receiving the federal payments enumerated above can open an ETA, into which the company can send direct deposit payments (though this may be restricted by the bank offering the ETA). Thus, an ETA will not solve the bank account problem for all unbanked employees, but it may be an option for some of them.