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Why so Many Small Businesses are Using Pay Cards

Updated: Nov 19, 2021

Payroll cards, also known as pay cards, are an increasingly growing trend among small business owners. In fact, payroll cards provide easy access to an employee’s wages without the requirement for a bank account. This is perfect for anybody who cannot or chooses not to open a bank account.

What is a payroll card?

Pay cards let employees access the funds from their paychecks without having to set up a bank account. The pay cards function just like a debit card. The cards are loaded with a paycheck every pay period. These cards can be used to withdraw cash or make purchases. This could be an advantageous tool for small businesses, especially with those who employ workers without a traditional bank account.

From a worker’s point of view it is important to understand that there may be some fees associated with having a pay card. Some fees that come with the card include: monthly maintenance fees, ATM withdrawal fees, balance inquiry fees, fund transfer fees and account closure fees. Naturally, the exact fees will differ from company to company.

Advantages and Disadvantages


· Simple and easy to use

· Allow workers access to their paycheck without a bank account

· Easily replaceable if lost or stolen

· Access to funds immediately

· No risk of debt since it acts like a debit card


· Cannot earn interest like a traditional bank account

· Can be lost or stolen

· Charged fees

· May not be the best payment option

Can employers only offer pay cards as a payment option?

Employers are not allowed to only offer pay cards as a payment option. Despite the growing popularity of pay cards, federal banking laws require that employees be offered at least one other additional payment method. Typically employees opt in for direct deposit as their second form of payment. Each state retains the right to regulate specific payment methods offered to workers.

Where are pay cards accepted?

Pay cards are typically accepted everywhere a standard debit card would be accepted. A pay card can be used in stores, gas stations, and ATMs. Cash can be withdrawn from an ATM as well. Pay cards can also be used online on any website that would regularly accept debit or credit cards.

Can you deposit money on a payroll card?

Yes, most pay card providers offer the option to add funds to your pay card. Paychecks should get regularly uploaded to the pay cards every pay period. Some pay card providers allow the option of adding money at a money exchange or ATM, while others do not. Each provider is different so be sure to review the terms of your program.

In Conclusion

Pay cards offer a flexible option for administering payroll for small businesses. Pay cards can save small businesses money on processing fees, while catering to employees without bank accounts. From an employer’s point of view, pay cards are a great option to securely compensate your employees while avoiding fees on direct deposit and paper check overhead. Likewise, as an employee, pay cards offer a flexible payment option without the requirement of a bank account. Overall pay cards could be a viable option to many businesses and employees.

Partnering with a PEO like CornerstonePEO may be in your best interest. CornerstonePEO covers everything from HR and employee benefits to payroll and workers comp. Our industry leading PEO services offer innovative, cost effective, easy to understand business solutions for companies of any size and industry. Contact us to learn more.


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