Payroll Debit Card Advantages and FAQ

Although many payroll debit card advantages exist, many employers considering adding a reloadable debit card to their payroll processing have questions about how these cards work, and whether it will truly be an advantage to both employer and employee alike. Use this FAQ to determine if payroll debit card advantages outweigh the drawbacks and are right for your company.

Q: What is a prepaid payroll card?

A: A prepaid payroll card is a stored-­-value, reloadable prepaid card that works just like a debit card in terms of how it is used for purchases, but it only has access to the funds that have been loaded onto it. The card has a 16-­digit account number, also similar to a debit card and is branded by a worldwide transaction network (such as Visa or MasterCard).

Q: What is a Prepaid Access Account (PAA)?

A: A Prepaid Access Account is an account that is established by a financial institution (bank) which is similar to a Demand Deposit Account (DDA--Checking/Savings). With a PAA you can access your funds from a prepaid card or mobile wallet.

Q. I have read that some cards provide Early Pay Distribution as a benefit for employees. How does that work and what are the fees?

A. A few reloadable debit cards offer Early Pay Distribution (EPD) as a benefit to employees. This debit card advantage allows employees to access wages earned but not yet paid. Wages withdrawn will be subtracted from the the total amount usually paid on payday. The employee will be charged a small flat fee (usually a few dollars per transaction) and depending on the card, the employer may or may not be charged a transaction fee. Employers should look for a card with no fees for the employer.

Q: If I begin using a payroll debit card at my company, what do I need to change in terms of process for payroll, accounting, etc.?

A: While the answer varies from company to company, the short answer is: very little. When you deploy a payroll card, the only thing that you really should change is that 100% of your employees go on direct deposit where permitted by law. Depending on your payroll process, whether it is outsourced, how the funds are actually drawn from your accounts, etc., other changes may be necessary. However, these are generally minor and can be accomplished through electronic processing/transfers.

Q: Some of my employees are already on Direct Deposit. Will I need to switch or move them over to the payroll card?

A: Not necessary. That will be up to you. There are certain debit card advantages over typical direct deposit. These may include immediate off-cycle fund transfers, such as covering travel expenses, funding incentives or terminations, tighter fund management of the payroll cycle, etc. Some companies have completely shifted to using immediate card transfers for payroll vs. direct deposit to provide better cash management.

Q: I would like to get 100% of my employees on a reloadable debit card. How do I do this?

A: Some states, (such as California and Nevada) require that receiving a paper check be available as an option for all employees. However, in "green states", (such as Utah and Colorado) 100% electronic payroll distribution is accepted and can be mandated by employers. Employees in any state, however, can not be mandated to pay for access to their payroll funds.

Q: Do employees have to apply for a reloadable debit card?

A: Yes, most everyone can qualify for the payroll debit card advantages. The only requirement is to pass the Patriot Act screening process.

Q: When is an employee's pay available on the reloadable debit card?

A: The pay is available on the card on payday morning. They can check their balance online, use the mobile interface application, or call the customer service number on the back of the card.

Q. Is there a Monthly Maintenance Fee on reloadable Debit Cards?

A. Some cards have monthly maintenance fees, others do not. Be sure to carefully compare fees for each payroll debit card you are evaluating.

Q: Where can employees use their payroll debit card?

A: They may use it anywhere their card's brand (MasterCard or Visa) is accepted, worldwide.

Q: Are there fees to use the payroll debit card?

A: The card may or may not have a monthly maintenance fee, depending on the card selected. There are usually free transactions that each cardholder can use each pay period. Additional transaction fees may apply for certain types of transactions.

Q: How much can employees withdraw or spend at any given time?

A: They can withdraw $500 per day at an ATM (subject to limits imposed by ATM operators and their Cardholder Agreement.) The available balance on their card determines other limits.

Q: Are there surcharge fees which will apply at an ATM?

A: For each payroll period which their card is loaded, employees will receive one free ATM withdrawal at any fee-free ATM. Most ATM owners charge a nominal fee, which typically runs from $1.00 to $4.00. This fee will be deducted from the available balance at the time of the transaction.

Q: What happens if employees don't spend all of their pay?

A: Any amount not spent will remain on the card as available balance and accumulate as additional funds are deposited onto the card. Cards can hold a maximum balance of $9,999.99 at any given time.

Q. Can employees get a Cash Advance with no fee?

A. Depending on the card, yes. Some cards charge a fee for this; others have no fee for one transaction per value load and then charge a fee for subsequent cash advances. Consult the fee schedule of any card you are evaluating to see if employees are charged a fee for cash advances.

Q: Can employees overdraft the card?

A: That depends on the card program they selected at the time of application.

Q: Can employees pay their bills with the reloadable debit card?

A: Yes, they can use the card itself for this purpose, or they may use the web tools to perform online bill payment. Fees may apply depending on the program selected.

Q: If an employee has an odd amount remaining on the debit card, how can they get this money?

A: They can make a POS purchase for the amount remaining, they may transfer the balance to a bank, or they may present the card to a bank that displays the brand of their card and request the balance be deducted from the card and paid to them as cash.

Q: Is the Payroll Debit Card a credit card?

A: No. The payroll card is a reloadable debit card, not a credit card. Each pay period the employer automatically loads payroll onto the card. Employees may also deposit funds manually, or from other sources, such as their tax refund or another electronic depositor. The funds may go up to $9,999.99 before the card will no longer accept deposits.Each time the employee uses the card, funds and any applicable fees will be deducted from the available balance.

Q: What if the employee's payroll debit card is lost, damaged or stolen?

A: Employees should immediately report that their card is lost or stolen. They may do so by calling the customer service number on the back of the card. 

Q. Can employees have a paper statement mailed to them?

A. Employees may opt to have a paper statement printed a mailed for an additional fee.

Q. Can employees pay bills online with the payroll debit card?

A. Employees can typically use the online bill pay function with a fee per transaction, typically a dollar or two.

Q: Can employees transfer money to their bank account from their card or from their card to their bank account?

A: Yes, they may transfer funds from their card to a U.S. Bank account via the cardholder support website. Employees should contact their bank for more information about how to transfer funds to their payroll debit card from their bank account.

Q: Do employees get to set their own PIN?

A: When they receive their payroll debit card, they must activate it using the number on the card carrier or the sticker on their card. They will be asked to set their PIN using an automated system at that time.

Q: What if employees forget their PIN?

A: They must call customer service and follow the prompts for setting a new PIN.

Q: Can the employee request a card for a spouse or another trusted family member? What is the cost? How long will it take to receive the card?

A: Yes. Additional debit card advantages may be acquired by calling customer service or accessing the cardholder support website. Additional fees may apply depending on the card program chosen. Cards will generally take from 7-10 business days to arrive, although rush-processing is typically available for an additional fee.

Q: Does the employers see or get reports about how the employee uses the payroll debit card or how the cardholder spends available funds?

A: No, all transactions are private. The employer has no access to payroll debit card usage information unless the cards are part of a corporate expense management program

Q: Can employees use their card in a country other than the U.S.?

A: They can use their payroll debit card advantages at any place their card's branded logo appears. International and other POS transactions and other transactions may carry surcharges or increased surcharges not included in domestic transactions.

The bottom line is that with careful comparison of fees and features, employers should find that payroll debit card advantages can be mutually beneficial and can be cost-efficient to both employer and employee alike.

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