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Wal-Mart Stores Inc. Wednesday announced it is using an electronic payroll program designed to reduce paper paychecks and pay stubs distributed each year to Wal-Mart and Sam's Club U.S. employees. Wal-Mart will use First Data Corp.'s Money Network Payroll Distribution Service, which includes a MasterCard-branded payroll debit card. Wal-Mart introduced the program two weeks ago at 36 stores in eight states. The world's largest retailer based on annual revenue will roll out the system nationwide by the end of the month. "[This deal] really legitimizes the whole idea of a large employer using electronic payroll distribution," Jim Contardi, First Data senior vice president and division manager for prepaid, tells CardLine sister publication ATM&Debit News. The program enables Wal-Mart "to reduce paper usage, [which] is right in line with [our] commitment to eliminate waste wherever we can," Tom Schoewe, Wal-Mart executive vice president and chief financial officer, said in a statement. The payroll system also includes Money Network Checks Wal-Mart employees can use to pay bills. Wal-Mart employees can also opt to receive their pay by direct deposit. More companies are switching to electronic payroll systems to reduce the costs associated with printing checks, according to Contardi. "Until you've eliminated the last check, you really haven't taken out the infrastructure costs of having a checked [employee] population," he says. First Data declined to disclose specific fees associated with the payroll card, but Contardi believes they are competitive with other cards. Payroll cards have been a growing product for the prepaid industry, and Contardi believes other retailers will follow Wal-Mart's lead. "This is a watershed event because we have a big retailer embracing electronic payroll distribution," he says.

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