Square Payroll: employees paying fee to get payroll early

[Brian90]

I'm hearing from employees that are on direct deposit they're given an option to pay Square a fee to get their payroll early. This doesn't really seem right as money is withdrawn from our business account close to a week ago and the fee is basically for shortening this float time that is required by many payroll companies. We could theoretically pay everyone early if we wanted to - it just seems strange this is an option at all.

How does this actually work and does this seem ok to the rest of the community this is happening?

[kellyj]

@Brian90

Thanks for surfacing this issue, happy to answer this in depth for you. Payroll deposits are sent to your employees bank account similarly to how you, as a Square Seller, get your deposits via ACH transfer.

The speed in which payroll deposits is 4 business days after a you complete a payroll run to then deposit to the employee.

Some states allow employees to Instantly Transfer their paychecks up to 2 days earlier. AZ, FL, GA, NC, TN, TX 

The offer is the same as Instant Transfer for your deposits as a Seller- the funds are available immediately if you so choose, and it's credited to the account immediately when the funds are available for deposit from the Payroll account, otherwise it does have to transfer through normal ACH means.

[This post was updated by moderator in 2019 to reflect a name change - deposits are now called transfers.]

I do understand that it seems like it's charging to receive this during float time, but it's really only changing the time that is needed for banks to receive and credit the ACH transfer, and speed this up for the employee. Which is usually 1-2 days before it would be credited to their account. You can read more about this function here.