What Employees Should Know About Payroll Debit Cards

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What's a payroll debit card and how do you get paid with one? A number of companies are offering employees this form of payment by providing them with a payroll card instead of direct depositing their pay or giving them or a paper check.

What Payroll Debit Cards Are

Each pay period, these cards (which are issued by the employer) are automatically loaded with the employee's paycheck. The cards can be used like debit cards; the employee can use the card to make purchases, receive cash back from purchases, and withdraw money from an ATM. Some cards even allow employees to pay bills directly with the card.


Many large companies, particularly those with a number of hourly workers, have begun offering payroll debit cards as a form of payment.

Walmart, Taco Bell, Walgreens, and some McDonald's franchises, for example, have begun offering payroll debit cards. Some public-sector employers are even offering payroll debit cards as a way for employees to receive federal benefits like disability and medical leave.

Benefits of Payroll Debit Cards

There are a number of benefits to payroll debit cards, for both the employer and the employee. Employers, for example, save money by not issuing paper checks to employees. Large companies with many employees can save thousands of dollars this way.

  • Quick Delivery: For employees, payroll debit cards provide dependable delivery of their paychecks. Employees do not have to come into the office to pick up their paycheck or make a trip to the bank or check-cashing store. They also do not need to have a bank account in order to use a payroll debit card.
  • Reliability: Employees with a debit card do not need to carry around lots of cash, which could be stolen. If an employee's card is stolen or lost, most companies offer fraud protection and will give the employee a new card.
  • Flexibility: Employees can typically load salaries from multiple employers onto the card, and even take the card with them when they switch jobs.
  • No Need for a Bank Account: Over 8 million households are “unbanked,” meaning that they do not have a bank account, according to a 2017 survey by the Federal Deposit Insurance Corporation. These employees cannot participate in direct deposit options for payment. Thus, these employees typically have to rely on check-cashing services to cash their paychecks, which can be expensive.
  • Privacy of Purchase: The company that issues the card, not the cardholder's employer, will track what the employee spends.

The Drawbacks to Payroll Debit Cards

Payroll debit cards appear to be a win-win situation: the employer saves money by not issuing checks, and the employee receives a reliable payment that she can use in a variety of ways. However, there are a number of potential drawbacks to these cards.

The biggest issue is the hidden fees. Some providers charge cardholders for common activities such as receiving paper statements, over-drafting, replacing cards, transferring money to another account, making withdrawals at most ATMs, and even not using the card for a period of time. For hourly and part-time employees, these income-reducing fees can add up quickly.

What to Do If You Want to Opt-Out

When deciding whether or not you want to participate in your employer's payroll debit card plan, look closely at the specific plan your company is offering. Are there a number of fees surrounding the use of the card? Is there another payment plan that would be more convenient for you? If so, you might choose to opt out of the debit card plan.

Most employees who do not want to be paid via payroll debit card can simply opt to select a different payment method, such as a paycheck or direct deposit. However, some employers have mandated the use of payroll cards, leading to legal issues. An employee at a McDonald's sued the franchise for forcing her to use a payroll card, arguing that she should be given other options.


Some states allow employers to forgo paper checks in exchange for direct deposit or payroll cards, but other states are less clear about what payment options employers must offer their employees.

You should check with your state's Department of Labor office for the latest laws and regulations.

If you want to opt out of your company's payroll debit card plan, but are not given the option to do so, you should first try discussing the issue with your employer (if possible, through the human resources department).

If this does not work, you should contact the Consumer Financial Protection Bureau or your state's attorney general. Whether you decide to use or opt out of a payroll debit plan, be sure to thoroughly look into your company's payroll debit plan and assess your own financial situation before making a decision.

The Bottom Line

Payroll Debit Cards Are Pre-Loaded With an Employee’s Pay: Workers can use the card to buy goods and services, get cash back, or withdraw money from an ATM.

There Are Many Bonuses to These Debit Cards: The plusses include flexibility, reliability, privacy, and the ability to get paid without having a bank account or using expensive check-cashing services.

However, There’s One Big Drawback: Some providers charge hidden fees for options like receiving paper statements or making withdrawals. 

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. 

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