Payroll Card

What Is A Payroll Card?

A payroll card is a prepaid card on which an employer loads an employee’s salary each payday instead of making direct deposits into their bank account.

Deeper Definition

A payroll card is an employer-issued debit card where employees receive their salaries every payday. It involves an arrangement between an employer and a bank or other financial institution to load wages directly onto the debit card rather than deposit it directly into their bank account or give them paper checks.

Typically, major payment processors such as Visa and MasterCard are the manufacturers of the Payroll Card. As a result, it functions as a regular debit card, allowing employees to make withdrawals at the ATM and make purchases online or anywhere electronic payment cards are accepted.

An employer only needs to issue the card once to employees because they can reload it. For instance, assuming today is payday, and an employer gives a payroll card to their employee, they don’t need to issue another card when another payday arrives. Instead, they will reload the one already with the employee.

A payroll debit card benefits both employers and employees. For employers, it saves them the cost of printing paper checks. For employees, it offers immediate access to their money. Those without a bank account get to enjoy the benefits of having a debit card.

Despite the benefits for both employers and employees, an employer cannot force the employee to accept it as the mode of receiving their salary. Usually, an employer would offer employees a choice between direct deposits to their bank account or a payroll card.

A payroll card works the same way a debit card works. Aside from potential ATM surcharges, there are usually no fees associated. However, a downside is that if an employee misplaces it, they will pay to replace it.

Payroll Card Example

Stanley works in a restaurant downtown. He hasn’t had time to go to the bank to create an account. His employer offers to pay him with a payroll card, and he agrees. Now Stanley can receive his salary on the card every payday and also shop online despite not owning a bank account.