If Glen Sofo has his druthers, paper paychecks will soon go the way of the time-clock punch card. Dispensing weekly paychecks has always been a hassle for Sofo, controller of Pomerantz Staffing Services, which supplies thousands of clerical and industrial temps nationwide. On several occasions, mail snafus have prevented hundreds of temps from receiving their checks on time. "In our business, people aren't happy unless they are getting paid," he says. "We have to keep them happy."

Last summer, Sofo found a solution to his problem: payroll debit cards. Now, employees who sign up for the program each receive a debit card. On payday, Sofo e-mails a file containing their time-sheet information to a payroll company, Houston-based FSV Payment Systems, which withdraws the proper amount of funds from the company's bank account, adds the amount to the cards, and e-mails pay stubs back to Pomerantz. Unlike so-called direct deposits, which actually take two days to process, the funds on prepaid cards become available within seconds. Employees may then use the cards to withdraw money from ATMs, pay bills online, or transfer funds to another cardholder. "It's a better way of getting paid," Sofo says.

The American love affair with plastic is longstanding. But when it comes to payroll, businesses are just now beginning to make the switch from paper -- though their numbers are expected to grow. While only 3.5% of payroll managers surveyed recently by the American Payroll Association reported using payroll debit cards, 50% said they were thinking about implementing them in the next year. The potential market is huge, considering that 30 million American workers don't have bank accounts, notes John Gruce, senior vice president of prepaid card services at Bank of America, which provides such cards to companies like UPS and U-Haul. No wonder that many payroll companies, including FSV and Optimum Pay of Irvine, Calif., have started offering the service. "It's becoming more mainstream," Gruce says.

"A lot of steps in the check-mailing process can go wrong. There's far more control with a debit card."

The convenience is nice. But switching to plastic is also cheaper. Sofo's first batch of 100 cards was free, as is the case with many vendors, and additional cards cost $1 each. Pomerantz then pays FSV a few pennies per card to load the funds. Paper checks, by contrast, cost about 55 cents each to print and mail. Even better, notes CEO Michael Epstein, there have been far fewer problems with lost or undelivered checks. "There are a lot of steps in the check-mailing process that can go wrong," he says. "There is far more control with a debit card."

So far, debit cards have been a hit with employees who don't have bank accounts. While most of Pomerantz's 250 full-time staff members are paid through direct deposit, that's not an option for hundreds of temps who lack bank accounts and rely, instead, on check-cashing services, which pocket 2% or 3% of each check. "Now they don't have to walk around with a wad of cash," Sofo says.

The only difficulty has been convincing employees to abandon their old-fashioned paychecks. "A lot of people like getting their check on paper," Sofo says. About 10% of Pomerantz's temps have made the switch. Meanwhile, Sofo holds seminars to educate employees about the cards and encourages new hires to sign up immediately. "Getting them to try it is hard," he says. "But once they do, they love it."