The rise of payroll cards
Employers are obligated to pay their workers.
But firms have choices on how they pay, and a growing number are offering payroll cards.
In a recent report, research firm Aite Group predicts use of these cards will increase about 20 percent from 2002 to 2017.
Madeline Aufseeser of Aite Group notes that one impetus for adopting these cards – which often are marked with familiar logos on debit or credit cards like Visa, MasterCard or Discover – is that increasing numbers of workers don’t have bank checking accounts.
Workers should be able to take these cards to any bank that is associated with Visa, MasterCard or Discover, and receive their full wages without fees, according to guidelines issued by the National Consumer Law Center and the American Payroll Association.
Workers should also be able to use their payment cards at some ATM networks without surcharges and be able to make purchases or pay bills over the phone, online or in-person.
And it’s not just employers who can choose how their workers get paid.
A recent bulletin issued by the Consumer Financial Protection Bureau reminds employers that workers must have a choice between payroll cards and another method of pay, like a paper check or direct deposit into a checking account.
Federal regulations also dictate that card issuers must provide a 60-day account history on the card and account balance information. Moreover, many states have their own restrictions on wages paid by payroll cards.
Although payroll cards are making inroads, they still have a long way to go before becoming commonplace, according to the American Payroll Association, which says that about 85 percent of pay today is directly deposited, with paper checks following at about 13 percent, and cards accounting for less than two percent.
© CTW Features