Cash Pickup

“Cash pickup” in payroll is when an employee receives their paycheck not through direct deposit or a physical check but by going to a designated location (like a participating store or ATM) to withdraw their wages in cash.

Essentially, employees ‘pick up’ their pay in cash instead of accessing it from their bank account.
This is an excellent payment method for employees who don’t have a bank account, but it requires careful record-keeping by the employer to remain tax-compliant.

What to know about cash pickup in payroll

No bank account needed

This method allows employees without a bank account to access their pay.

Involves a third-party provider

Usually facilitated through a third-party service that oversees the cash pickup locations and manages the funds transfer.

Employers must have scrupulous record-keeping

Employers must meticulously document each cash pickup transaction to comply with tax regulations and prevent discrepancies with payroll reporting.

How does cash pickup work?

1. Payroll calculation: The employer calculates the employee’s wages.
2. Cash pickup order: The employer sends a cash pickup order through the third-party provider with the employee’s details and cash amount.
3. Funds transfer: The provider electronically transfers the funds to the designated location, such as an ATM or a participating grocery store.
4. Employee access: The employee receives a notification with a code to collect their cash at the designated location.
5. Accessing the ATM: The employee goes to a participating ATM and selects the “cash pickup” option on the screen.
6. Enter code and ID: The employee enters the provided code and presents their photo ID to verify their identity.

How does employee cash pickup work at an ATM?

Employee cash pickup at an ATM refers is when an employee withdraws their paycheck or a portion of it from an ATM using a unique code or reference number provided by their employer. With this method, employees don’t need a traditional debit card to access the funds.

This payment method is often facilitated through a service like Mastercard’s Cash Pick-Up feature, which allows employers to send funds to employees who can retrieve them at a participating ATM with a PIN or similar identifier.

Considerations for cash pickup

Fees

Some providers charge fees for cash pickup services, which might be deducted from the employee’s paycheck.

Limited access

Depending on the provider’s network, there may be fewer cash pickup locations in certain areas.

Security concerns

Employees should understand potential security risks when withdrawing large sums of cash.

Identification required

To access the funds, the employee will usually need to provide a valid photo ID in addition to the code.