Countless employee stipend administration tools and software are entering the market with different approaches, making selecting the perfect vendor more challenging.

This post will guide in making the right decision for your business and employee needs.

Why Transition to Stipend Management Software?

You might wonder why people are ditching the traditional point-solution perks approach and moving to stipend management software. 

Every software is different, but below are ten of the significant benefits you can expect from using a stipend platform:

✔️ Relevant for right now and the future

Unlike one-off point solutions, employee stipends evolve to meet your team’s needs. Using a stipend management platform allows you to tailor your fringe benefits to meet current budgets and the wants and needs of the people in your organization.

✔️ Personalized and inclusive

Gone are the days of one-size-fits-all perks like on-site gyms, catered meals, or trendy meditation apps.

Today’s workforce is multicultural, multigenerational, and multi-location, so personalized perks are inclusive because they make it easy for your employees to get the lifestyle benefits they prefer. With stipends and Lifestyle Spending Accounts, your employees are given a budget for them to invest in the lifestyle purchases that will benefit them the most.

Here are a few ways Compt’s reimbursement stipends are improving lives, and in our users’ own words:

• “The benefits inspires you to not only take care of yourself and grow but that you are appreciated.”
• “I am able to buy a yoga punch pass. Yoga is my anti-depressant :)”
• “It has allowed me to participate in exercise programs that I normally would not have attended due to the cost.”
• “This is a purchase of a second monitor for my home office to attach to my Mac computer so I can have better workflow efficiency (finally). Thank you!”
• “Lyfts for when my elderly grandpa visited me in NYC!”
• “Cleaning since we couldn’t keep up with it when we were sick!!! “
• “It has been a few years since I last bought new shoes for myself. I decided that this was something I needed at the first of the year and bought a few new pairs with my Compt money. Thank you!”
• “Rental car cost for travel to help my mom visit my uncle who is going through cancer treatments and taking him to and from hospital visits and treatments.”
• “Paying off my car loan for my 2013 Subaru Forester. Thank you!”
• “Additional childcare during this challenging time in my family – THANK YOU! <3”
• “I’ve dreamed of having matching family PJs for Christmas, and I was able to make it a reality for our whole family!”
• “I have used it to cover expenses for my puppy.”
• “It helps with the gas to get back and forth to work.”
• “Upgraded personal laptop. Thank you for the stipend it helped a lot.”
• “The Compt benefits make feel more free to book a hotel that’s just a little nicer than usual once in a while :)”
• “Its been a great perk! This just feels like a gift every 3 months.”
  

✔️ Increased engagement rates with company perks

Instead of an intranet page full of logos and potential vendors (which can be overwhelming), a stipend approach simplifies the process and lets employees get what they truly need.

✔️ Competitive advantage

Many large companies have extensive benefit packages (again, with many logos and processes to navigate), but this allows companies of any size to compete for the same talent successfully. 

✔️ Automated processes

The ongoing administrative process of stipends is simpler and takes less time. HR can support software that reduces administrative burden and makes them look brilliant.

✔️ All-in-one or supplemental perks

With these software options, you can turn it into your entire perk offering or use it as a supplemental add-on to what you’re already doing to add personalization and inclusivity.

✔️ Flexible for HR

Stipend programs are easy to update for your entire company. This is much easier than removing a culture-related perk like pet insurance.

✔️ Scalable perks

Regardless of whether you’re scaling up or down, stipend software can help you do it with ease.

✔️ Aligns with company values/goals

What does your company want to reinforce behavior around? Whether it’s learning, health, or something else, stipend reimbursement software can help you create perk programs that align with your overall goals.

✔️ Zero waste

With stipend reimbursement models, you’ll reduce the budget wasted on unused perks, save time picking rarely used perks, and reduce the hassle of managing them all.

Stipend Management Tools, Vendors, and Software

In alphabetical order, the following perk software you may want to look into are the following:

• Compt (that’s us!): Compatible with every vendor, a stipend reimbursement software that allows for maximum flexibility and inclusion that works (with 3x higher employee engagement rates than the average point solution)
• Benepass: Main focal point is pretax benefits, like HSA/FSA/Commuter, but they do also have an LSA product
• Forma: Like Benepass, their main products are pre-tax related, but they too, have an LSA product.
• Espresa
• Thrivepass

Remember that this approach differs from the legacy approach of corporate discounts, which you’ll see with Reward Gateway or social recognition software like O.C. Tanner or Achievers.

Top 6 Criteria to Consider when Buying a Stipend Software Solution

1. Price

We put price first on the list because everyone has a budget, and sticking within its confines is essential to getting stakeholder buy-in for a new tool.

Most HR tech benefit software costs between $1 and $8 per employee and includes an implementation fee — stipend management tools are no different.  

With these types of software, you pay an additional amount, which is how much you’d like to allocate to each team member per period (monthly, quarterly, semi-annually, or annually).

For example, instead of bringing in catered lunches, you could give each employee $100/month to spend on their lunch of choice.

Questions to consider:

• What budget were you spending on on-site perks that you can transition to an employee stipend?
• What perks and benefits can you consolidate and filter through this program to save money and time? For example, instead of paying for gym memberships, meditation apps like Calm/Headspace, and book programs (which can be challenging to manage), turn them into a perks stipend or program through one of these vendors. This reduces the multiple logins, manual processes, and price points for each employee, saving money and time.
• What tools (e.g., calculators) are available by the vendors to help you track your cost increase as your head count increases or decreases?
• Are there any software discounts?

Psst: For way more information on the budget side of things, you should check out our post on how to set up your employee stipend.

2. How much administrative time and effort you’ll need

A big reason to buy software is to automate and streamline the administrative processes that might be weighing down your team and its operational capacity.

This is especially true when it comes to offering stipends because you’ll either need a way to track the funds distributed to employees to add to their W2s for payroll taxes for taxable stipends (wellness, travel, family). Or for nontaxable stipends (like equipment, professional development, tuition reimbursement, relocation, or work-from-home), you’ll need receipts in the event that your company goes through an audit.

The key is choosing software that prioritizes accuracy, safety, taxes, and can manage the complexity of personalization without adding too much work for you or your people.

Questions to consider:

• How much time does it take to manage your current perk programs? Some items to account for are picking, piloting, purchasing, launching, communicating, & upkeep.
• How much time and money could you save by implementing a new approach?
• What strategic projects could you tackle if you didn’t have to manage your perks or stipends?

3. Desired participation rates

We know what you’re thinking: If you take the time to roll something out to your people, you want to ensure they’ll love it. Love translates into a metric through participation or utilization rates. 

If you aren’t familiar with participation rates or utilization rates, here are two definitions with examples:

Participation rates are the percentage of your employee population who has access to software, that actually uses it.

Example: So if 1,000 employees have access, and only 200 use it, that is a 20% employee participation rate. While traditional wellness benefits see ~20-40% employee participation, Compt’s platform delivers 2x the industry average participation, with zero wasted spend.

Utilization rates are the percentage of allocated stipend funds that employees spend.

Example: If $60 spent from $100 allocated to an employee, that’s 60% utilization.

A stipend management approach generally has higher usage rates. Unlike individual perk vendors like meditation apps, onsite/virtual yoga, and dry cleaning, which only satisfy a small percentage of your people, stipends allow you to offer something for everyone.

When connecting with vendors, ask them about their typical engagement rates to understand which people are engaging with.

Questions to consider:

• What are your current engagement rates with benefits, perks, or stipends?
• What would increasing engagement rates mean for your business and people?
• If you’re a larger organization, what might be an excellent team to pilot the software first to determine if it’s worth rolling out company-wide?

4. Reimbursement vs. Debit Cards vs. Marketplace: What Model Works Best?

When evaluating stipend software, one of the most important decisions is how employees will access and use their benefits. There are three main models: marketplace-based, debit card-based, and reimbursement-based.

Each has tradeoffs in flexibility, control, and participation which we’ve outlined below:

Reimbursement-Based Models

A reimbursement model is the most flexible option. Employees spend their stipend however they want (within HR-approved categories) and submit receipts for reimbursement. This approach opens up the widest range of possibilities:

• Any vendor, anywhere: From local businesses to global brands, employees choose what works best for them.
• Customizable by HR: Easily define categories like wellness, professional development, or remote work setup — with no need to manage vendor contracts, or be limited by a vendor marketplace.
• Higher engagement and satisfaction: When people can personalize their benefits, they’re more likely to use and value them.
• Audit-ready and tax-compliant: Receipts create a clear paper trail and allow for precise policy enforcement.

The significant difference is that there are no vendors to choose from, meaning people can buy whatever is best for them, from their favorite meditation app to a healthy meal delivery kit or local yoga studio.

Marketplace-Based Models

Marketplace models work like a points redemption platform. Employees choose from a curated list of vendors selected by the software provider. These platforms often have polished user experiences and make it easy to manage spending—but they come with significant limitations:

• Limited vendor selection: Employees are confined to the marketplace options, which may not include their preferred services, local businesses, or unique needs.
• Underutilization risk: If employees don’t find what they want, they may not use the perk at all.
• Less flexibility for HR: Expanding categories often means adding new vendors, contracts, and costs.

Debit Card Models

Some platforms offer company-issued debit or prepaid cards. These give employees more flexibility than a marketplace but still carry challenges:

• Merchant category code (MCC) restrictions are used to block unapproved purchases, but they’re often overly broad or inaccurate, leading to employee frustration.
• Risk of misuse or tax non-compliance if employees use the card for ineligible expenses.
• Difficult to enforce policy nuances (e.g., “only local gyms,” or “no alcohol with meals”).

Debit cards offer speed and ease but less control and reliability for tax reporting or budget management.

Questions to consider:

• Which of these will align more with your organization’s values?
• Which of the following will give your people greater access, inclusivity, and personalization?
• If you were to receive $100/month for wellbeing, what would you purchase and which method would offer you access to it?
• Which provides you with a tremendous competitive advantage?

5. IRS Compliance

We know you probably don’t want to think about this; because isn’t IRS compliance in finance’s hands?

But the reality is, most of the perks you offer your employees (from food to yoga to pet insurance) are taxable income for your employees.

The IRS is pretty clear in its guidance as to which benefits are taxable and which aren’t. And the more you consider this as part of your software purchasing decision, the more finance will appreciate your process and see you as a strategic parther.

So with that, as you consider increasing or changing your team’s perks, you must also consider how you will track and manage those tax requirements.

Questions to consider:

• What would that process look like if you have to manage the IRS compliance on your end?
• If you aren’t tax compliant in your fringe benefits now, how will that impact your ability to grow as a company, and how would that impact your ability to pass an audit or raise future capital? 
• What does your CFO think about the software options available?

6. Implementation timeline

For several reasons, considering the implementation timeline is crucial when evaluating a stipend platform.

Firstly, the length of the implementation timeline will determine how quickly you will receive a return on investment. A shorter one allows an organization to start reaping the benefits of its stipend program sooner.

Secondly, the implementation timeline and process reflect the vendor’s expertise and commitment to customer satisfaction, indicating a smoother transition for you and your employees and better support throughout the implementation phase.

Lastly, a well-planned implementation timeline enables HR teams to prepare and allocate resources effectively, minimizing potential disruptions to ongoing stipends, workflows, or budgets.

Our customers have found that a shorter implementation timeline is better because impact also happens quicker.

Additional considerations when selecting a perk management vendor:

Additional considerations when selecting a perk management vendor:

1. International functionality

The highest value is when employees can use their stipends equally, regardless of where they live. If your company is international, you’ll want to create a program to support everyone.

If your company has employees worldwide, ask the vendors you’re considering how they support your international people.

2. Pre-funded vs. pay-as-you-go

Pre-funded models require upfront payment of the entire amount allotted to your people. This method might be fine if you have a lot of cash, but it isn’t a big deal.

However, consider what happens to the money that isn’t used? Does it remain in employees’ accounts in perpetuity or get refunded to the company?

Alternatively, there are pay-as-you-go models. With these, you only pay for what your employees spend, which allows you to keep your cash on hand until the money is spent. Any money that isn’t spent is kept in the company’s pocket, which makes it a win-win for employees and employers.

3. Points vs. Dollar Compensation

Point systems have been around for a while and are now larger legacy companies like Achievers and Rewardian built their recognition software. Points can be fun, but they can also introduce unnecessary complexity.

The dollar compensation model is gaining traction because it’s the most straightforward and easily understood by your people. The money can be dropped into an employee’s paycheck every month (which Laszlo Bock’s research at Google advises against), given on a debit/gift card, or reimbursed later. The latter approach still encourages employees to be proactive about what they want by purchasing it and then being reimbursed later. 

4. Rewards & Bonus Functionality

The rewards and recognition software market is saturated with options to recognize your people, as well as them to recognize each other, whether it’s through high-fives, thanks notes, badge-giving, or gift cards.

Some vendors mentioned above include bonus program functionality if you don’t have a recognition platform yet. This can help you celebrate work anniversaries, implement sales spiffs, or recognize a job well done. And given today’s macroeconomic environment, a more all-in-one tool is something your Finance team would prefer.

Additional Resources:

• [PDF Download] Perks Comparison Infographic. If you’re purchasing a stipend software, this download will help you direct your efforts and compare options.
• The Ultimate Guide to Employee Stipends