Payroll Debit Cards in 2020
In 2020 private companies are issuing payroll debit cards to employees to pay them. There are state regulations on payroll debit cards created to cover the rights of employees that employers must comply with. Prepaid debit cards are also used to provide access to unemployment payments. There are several states that issue unemployment benefits debit cards, which are reloadable. Payroll Debit cards are provided quite often to employees that do not have access to a bank account for one reason or another.
How Payroll Debit Cards Operate
Much like a debit card connected to a bank account set up with direct deposit of payroll, payroll debit cards operate the same way. The only difference between the two is that only funds from payroll can be deposited onto a payroll debit cards, which is unlike a bank account with a debit card. Each payday, the payroll due to an employee are added to the payroll debit card, which has immediate availability. The payroll debit card can be used to access cash at ATM machines, and it can be used to pay for services like rideshare or for goods like groceries. Cash can be drawn out at an ATM with no fee being charged, just so long as it is done at in network bank ATM machine.
Payroll Debit Card Regulations
Regulations on payroll debit cards are more like the regulation for debit cards compared to retail all-purpose reloadable debit cards for sale at retail stores. The fact is they are looked at as a prepaid debit card and not a regular bank account debit card. Retail reloadable debit cards have no regulations covering a consumer’s liability for any charges on the card that were not authorized. Debit cards and payroll debit cards have the protections when it comes to liability. Payroll debit card providers are mandated by law to provide the structure of their fees and provide a process in writing to customer dispute resolution. However, retail reloadable debit cards do not have the same requirements. Both payroll debit card and regular bank debit card providers by law may not make any updates to their card agreement terms without providing notice 21 days in advance. Retail preloaded debit card issuers can make changes to their card agreement terms without providing notice of any kind.
Payroll Debit Card Pluses
The advantages of payroll debit cards compared to paper paychecks are numerous. The most apparent plus is a payroll debit card can be used anywhere anytime and a paper check has be cashed at a bank or check cashing business, which most of the time means a fee must be paid when the check is cashed. The next plus is that the company saves time and money on payroll because it does not have to take the time to print checks and hand them out and it does not have to pay an employee to process and print payroll checks and hand them out directly to each employee. A third plus is that because payroll checks are not being printed it saves the company money on ink and it helps our planets ecology because a tree was not need to provide the paper to print the check on. Each state has regulations about issuing payroll checks or payroll debit cards. Check to see what your state’s regulations are about how you can issue payroll so you stay in compliance with your state’s payroll laws and regulation.
All in all payroll debit cards have their place in 2020. Preferably small business are better off issuing payroll through direct deposit, but one of the next best things is to issue payroll using debit cards.
