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Pay Cards: Pros and Cons

July 12, 2022 | posted by Abacus Payroll

There is not a one-size-fits-all payment program appropriate for all organizations. Learn about the pay cards alternative and if it would be a welcome offering to your small business employees.


While direct deposit is the most popular and convenient way to pay employees, direct deposit enrollment is not always 100% and the desire for paperless payment is increasing.

Pay cards, or reloadable payroll debit cards, are an effective alternative to traditional paper checks that have benefits for both the business and the employees. They provide an option for employees who do not have a bank account or credit cards to still have access to online shopping, automatic bill payments, and more.


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Pay Card Pros

  • Simple and Easy Funds Access for Employees – 22% of American adults are either unbanked or underbanked, which may limit their ability to receive direct deposit or make purchases online. By providing these employees with the pay card option, they are able to save time and money by no longer needing to wait for a check to cash or incur check cashing fees. Pay cards allow employees to access and monitor their money, account records, statements, transaction histories, and usage to monitor their budgeting. Not only do pay cards make it easier to access their funds, but they also help employees monitor their budgeting and improve their financial health.
  • Cost & Time-Effective for Employer – Pay cards are issued once and then virtually reloaded each and every payday. Employees no longer need to be physically present at their place of employment on payday to receive their pay check. This saves everyone time and money because there are no longer unnecessary visits or needing to wait for everyone to be present while also saving money on printing and mailing. This is also helpful if not all of your employees are central or on-location at your physical location.
  • Security – Pay cards are backed by the FDIC making them a lot more secure then plain cash. The funds are PIN protected so if a card is lost, the funds can be accessed or recovered via the PIN. This layer of protection helps protect employers and employees from fraud and theft with forged or stolen paper checks.

Pay Card Cons

  • Fees – While pay cards are viewed as cost effective, most pay card users do not have bank accounts which causes for them to acquire fees when visiting a bank or using an ATM. Some fees may include monthly maintenance feesout-of-network ATM fees, and balance inquiry fees. It is important for employers to fully understand what they are offering their employees and to be completely transparent about the fees included with the pay card plan they are providing. Ask your payroll specialist about the fees when selecting your pay card vendor.
  • Possible Loss or Theft – With a direct deposit, the employee has peace of mind knowing that the money is being wirelessly deposited into their account. However with a pay card (and like any debit card), there is an opportunity for the physical card to be lost or stolen. Having the money in a physical form allows for it to potentially be misplaced or taken by someone other than the owner.
  • Employee’s Choice – Employers are not allowed to require pay cards nor can they be the sole method of paying wages. Federal law mandates that employers provide their employers with an alternative option to pay cards, like direct deposit or paper checks.

If you are unsure if using pay cards is the right decision for your business and your employees, contact an Abacus Payroll provider today!


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About the Author: Abacus Payroll

Abacus Payroll, Inc. is a leading provider of payroll solutions for businesses of all sizes. Whether yours is a family-owned small business or a national corporation, we provide payroll, tax and other financial services on time and at an affordable price. Unlike other payroll providers, Abacus Payroll will assign your very own payroll specialist who will understand your payroll needs inside and out. So no more speaking to a different person each time, no more sitting on hold for hours and most importantly no more missed deadlines! Contact us today to see how we can help your business. You can count on us.