Employers use employee payroll cards to issue paychecks for wages due to employees, and employees use these cards to make purchases or withdraw funds from the accounts set up by employers. Many employee payroll cards work similarly to checking account debit cards.
Employers may issue employee payroll cards to low-income workers who do not have a bank account. This ensures that the employer can remain in compliance with regulations governing the amount of time it takes to pay employees, and it allows workers quick access to their funds. Employees use the cards to purchase groceries or other needed items in a manner similar to a credit card. Many employee payroll cards work the same as standard Visa or MasterCard debit cards, allowing workers to withdraw funds at ATMs or get cash back from participating retailers.
Payroll cards eliminate the need for paper checks and enable workers without checking accounts to receive their funds as quickly as those who receive direct-deposit payments from employers. The issuance of paper checks is often time consuming and costly, especially for employers in markets with high turnover and large numbers of workers, making payroll cards a cost-effective solution for many fast-food and retail companies. The issuance of the cards also helps employees avoid carrying large sums of cash or paying for check-cashing services.