What Is a Payroll Card?
A payroll card is a prepaid card employers can use to pay an employee's wages or salary each payday.Payroll cards are reloadable and are an alternative to direct deposit or paper checks.
These cards are supported by payment processors, such as Visa or Mastercard, and allow workers to use them anywhere electronic payment cards are accepted. Users can access their money from an ATM or cashback purchase in the same manner as a traditional debit card.
Key Takeaways
- A payroll card is a prepaid card employers can use to pay an employee's wages or salary each payday.
- Payroll cards allow employers to pay employees who do not have bank accounts.
- Payroll cards include the ability to pay bills and shop online.
Employer Benefits
Employers can offer payroll cards as an alternative to direct deposit or as a service for employees who do not have bank accounts. Employers who hire temporary or seasonal workers may use payroll cards.
A company's human resources or payroll department commonly helps enroll employees in payroll cards, similar to prepaid debit cards. Most service providers of payroll cards like Visa or Mastercard provide customer service assistance with lost and stolen cards, emergency card replacement, or cash advance services.
The FDIC estimates that about 6 million American householdsdo not have a bank account.
Using Payroll Cards
Payroll cards provide employees with an alternative way to collect wages. Payroll cards can be used for automatic bill payments or to get cash at an ATM. Payroll cards can be replaced if lost or stolen, and employees and employers can add funds to their payroll cards. Service providers may also include benefits such as:
- Making purchases online or at point-of-sale
- Using payment applications or "apps"
- Sending money to friends or family through Apple Pay and Samsung Pay.
- Tracking deposits and purchases
- Setting up balance alerts
Do Employees Need to Qualify for a Payroll Card?
Employees don’t need a good credit score or any credit history to receive and use a payroll card because it isn’t a credit card.
Can Employees Use a Payroll Card Like a Credit Card?
Users cannot use a payroll card to acquire debt like a credit card because there is no line of credit, and overdraft is not allowed.
Why Are Payroll Cards Gaining Popularity?
Many employees have moved from spending physical cash to digital payments. With online bill pay, and stores accepting payment by card, payroll cards give employees mobile paymentcapabilities.
The Bottom Line
A payroll card is a prepaid card employers can use to pay employees' wages. Payroll cards allow employers to pay employees who do not have bank accounts and include customer service benefits for lost or stolen card replacements. With the growing popularity of digital payments, payroll cards offer the ability to pay bills, shop online, and send money to friends or family.
