Payroll Cards Offer Alternative for Businesses and Employees


Employee debit cards offer a convenient alternative to paper checks. A payroll card allows businesses to avoid higher payroll fees. It also gives employees who may not have a bank account an easy way to access their money.

An estimate suggests $68.9 billion will be loaded onto payroll cards by 2017, reports MSN News. So you will be in good company, if you decide on this option.

But beware of state and federal wage rules when putting a debit card payment system into place. The American Payroll Association and the National Consumer Law Center share some cautions. Keeping these rules in mind can help you avoid legal hassles down the road.

Things to Watch with Payroll Card Programs

First, be sure employees can access their wages in cash without fees at least once a pay period.  Some debit cards have fees connected to withdrawing money.

But “free and clear access” to funds is required by many state wage and hour laws.

Any payroll card program you put into place should allow this access in any one of a number of ways. They could include things like ATM withdrawals, convenience checks, cash back at point of sale services or bank teller transactions.

Always Provide a Choice

Second, make sure employees have a choice other than a payroll card if they prefer it.

According to the American Payroll Association and the National Consumer Law Center, employees cannot be forced to take a payroll card as their only payment option. Direct deposit might be one option. However, some state wage and hour laws my also require a paper check option.

For example, a McDonald’s franchise in northeastern Pennsylvania was sued recently. The issue was a payroll card one former employee claimed had too many fees, the Huffington Post reported. The employee also claims the restaurant offered no other payment options.

Make sure you have all the information before starting a payroll card program in your business. Payroll cards can work effectively so long as you follow all the rules.

Card Photo via Shutterstock

7 Comments ▼

Joshua Sophy - Assistant Editor


Joshua Sophy Joshua Sophy is the Assistant Editor for Small Business Trends and the Head of Content Partnerships. A journalist with 17 years of experience in traditional and online media, Joshua got his start in the newspaper business in Pennsylvania. His experience includes being a beat reporter covering daily news. He eventually founded his own local newspaper, the Pottsville Free Press, covering his hometown. Joshua supervises the day-to-day operations of Small Business Trends' busy editorial department including the editorial calendar and outgoing assignments.

7 Reactions

  1. Be sure employees can access their wages in cash without fees attached to it. Some debit cards have fees connected to withdrawing money and this will eat into the overall savings of the staff.

  2. Aira Bongco

    Quite convenient but if it charges anything, then you’re better off receiving your money in the bank or having it given to you. Diana is right. This can eventually eat up the savings of the employee especially if the fee is too high.

  3. I’ve not witnessed payroll cards here in the UK but they seem like a good idea if they tick all the right boxes- Ben

  4. eh. I’m a little cold to this – especially considering the latest McDonald’s fiasco. When it comes to things like this, SOMEONE is making money off of it, and the card holders probably pick up the tab in one way or another.

  5. I think it gives people a choice, sure, but I wonder about the security of them and if there would be any fees (like Stephanie alluded to above.) Direct deposit is, IMO, the best route.

  6. I was about to say how good of an idea this was until I read the last portion of the post. I hadn’t thought about it as a hassle with so many fees, what benefit does the employer get out of offering these cards?

Leave a Reply

Your email address will not be published. Required fields are marked *

*