The next hot perk: Interest-free credit card –

Competition for top talent remains at an all-time high, despite the slowing of the dot-com economy. In order to attract and retain key personnel, employers must offer not only the highest salary possible, but also the best working environment and good benefits. Hard benefits, such as stock options and health insurance, and soft benefits, such as gyms, office concierges, and gourmet cafeterias, cost big money. Wouldn't it be great (from an employer's perspective) to offer a benefit that everyone wants -- and that doesn't cost anything to deliver?

According to a Unisys employee survey, employees want two main types of benefits: those that will save them time, and those that will save them money. A convenience often offered by employers is the ability to buy something, such as insurance, uniforms, or work-related items, and then deduct the cost from future paychecks. As we move more towards a digital economy, the concept of a paycheck will become more fluid, and we'll be able to spend it transparently -- allowing this small convenience to be expanded to any sort of purchase.

Kirk Watkins, CEO of e-Duction (see Resources) offers such a service. His company lets employees draw against future paychecks like a no-interest credit card at no cost to employers.

"Major corporations allow their employees to payroll-deduct group auto insurance premiums, homeowners insurance, or even a gym club membership," Watkins said. The next step is to allow employees to payroll-deduct any sort of purchase they want. Employees have long been able to buy work boots through their employer and pay for them out of their next paycheck -- but some employees would like the convenience of being able to buy a set of wine glasses, dinner out at a fine restaurant, or just a bag of groceries on the same basis.

The Pennsylvania-based company started out as a payroll deduction service firm that allowed hospital employees to purchase uniforms and equipment. e-Duction has repositioned itself, and in the first quarter of 2001 will broaden its service to encompass any type of purchase. The new e-Duction card will take the form of a major credit card, and will be accepted anywhere credit cards can be used. "For the employee, they get ubiquitous use of the card anywhere in the world," Watkins said. "And the employer doesn't have to track every single purchase in triplicate paperwork."

The average American carries $6,500 in credit card debt and pays up to 20 percent interest. The e-Duction card is interest free, which means the employee saves a bundle on credit card interest.

For companies who make e-Duction available to their employees, e-Duction handles all enrollment, payroll administration, and customer service on behalf of the employer. Smaller businesses will be able to offer the service as well, predominately through the major payroll services.

The e-Duction service limits an employee's line of credit to two and a half percent of his or her gross salary. For example, an employee earning $40,000 a year would have a credit line of $1,000. Twenty-five percent of the purchase amount is deducted from each of the next four paychecks, with an option for a longer-term payoff.

Of course, the employer doesn't want to get stuck with a bill if the employee charges $1,000 and then quits the next day. In cases like this, there are three options. Employees can sign up for an overdraft line of credit, pay the entire amount out of the last paycheck, or, if they become employed with another company who also offers the same service, roll their balances over.

"Early adapters are technology companies," said Watkins. "These companies are not afraid of new technology. They design and develop it every day."


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