For nearly every business, paying workers on time is a must-do and employees expect it to happen like clockwork. Some companies hand out paper checks or deliver wages with direct deposit payroll right to their employees’ bank accounts. Today, payroll cards are becoming increasingly popular as another payment method, especially for workers who do not have regular bank accounts.
What you’ll learn
What you’ll learn
Updated: May 8, 2025
Key takeaways
- A payroll card (often called a payroll debit card) is a simple way for workers to get paid without using a bank account
- Employers can cut costs and simplify payroll management by removing paper checks and switching to a payroll card
- With the payroll card option, workers typically get immediate access to wages
- Understanding payroll card fees and where your employees can use their cards is essential to make sure your workforce avoids getting hit with disappointing surprises
Below, we cover a lot of ground, including what a payroll card is, how it works, and the pros and cons of this payment method.
How payroll cards operate
A payroll card is a prepaid card that an employer loads with an employee’s wages every payday. It works like a normal debit card from major networks, such as Visa or Mastercard, and allows employees withdraw money and make in-store and online purchases. A payroll card can also be used to pay bills online.
Now that we have discussed how a payroll card works, let’s briefly discuss the type of employee that may need to receive funds via this method.
Understanding an unbanked employee
Since we are talking about pay cards, the term unbanked employee needs to be part of the conversation. Simply put, an unbanked employee is an individual that lacks a savings or checking account with a bank, credit union, or financial institution. According to the FDIC, there were almost six million unbanked households in 2023.
For these individuals, payroll cards provide an essential means to store earnings and facilitate day-to-day financial transactions. Let’s delve deeper into how they work.
The process of loading funds onto a payroll card
Employers have several ways to load cash onto a payroll card. The most common methods are as follows:
- Employer load: On payday, you can manually transfer an employee’s net pay from your business bank account to the employee’s payroll card.
- ACH transfer: You or the payroll card provider can establish an automatic feed to move funds to the employee’s payroll card via ACH transfer each payday.
- Payroll software integration: You can also use payroll software to handle all your payroll needs, including loading your employees’ payroll cards, in an integrated and secure fashion, thereby saving time and reducing errors.
Compared to issuing paper checks, loading payroll cards is faster and more convenient. You don’t have to spend time and money preparing checks, and employees don’t have to wait for a check to clear.
Accessing funds and making transactions
Accessing the funds on a payroll card and using the card to process financial transactions are fairly simple undertakings. Once a card has money loaded, an employee can take any of the following actions:
- Withdraw cash from ATMs, though some machines or networks might charge a fee
- Shop in person by tapping, swiping or inserting the card at stores and restaurants
- Get cash back, if the retailer offers that option
- Buy things from online retailers
Good to know
Payroll cards require no bank account, which makes them ideal for unbanked individuals.
Now that we better understand how payroll cards work, let’s find out more about a couple of options employers have.
Types of payroll cards
Payroll cards come in different forms. The two main types are general-purpose cards and store-specific cards. Below, we discuss the distinction.
General-purpose payroll cards
A general-purpose payroll card is the most common type. These cards run on major networks, such as Visa or Mastercard, and employees can use them virtually anywhere. Many general-purpose payroll cards allow users to monitor their balances online, oftentimes, via a mobile app. Some have other useful features, such as purchase alerts and spend management assistance. Some cards even allow employees to load their own money, making them similar to traditional bank accounts.
Store-specific payroll cards
Some retailers or companies issue store-specific payroll cards. These cards are great for employees of big retail chains, because they typically provide access to special discounts and deals. The downside is that other retailers and organizations often do not accept these cards, which can be problematic when an employee wants to use the card elsewhere.
Benefits of payroll cards for employees
The payroll card comes with various perks, especially for workers who lack a bank account or want quick access to wages. Let’s review some of the key benefits of a payroll card for employees.
Instant access to wages
Many employees like payroll cards, because earnings are usually available immediately on payday. Unlike direct deposit, which can take a day or two to show up in a bank account, most payroll cards grant instant access. The most prompt and consistent delivery of funds occurs when payroll cards are utilized in conjunction with payroll software.
Financial inclusion for unbanked individuals
Many people in the workforce either lack a bank account or have limited banking options. Payroll debit cards allow these workers to avoid check-cashing fees and long waits at check-cashing centers. By offering payroll card programs, you can give your employees a better way to handle their money.
Features and conveniences of payroll cards
Payroll cards also have other features and conveniences that benefit your employees. The most prevalent add-on features are as follows:
- Mobile app access: Check balances or transfer money with an app.
- Budgeting tools: Some cards come with spending alerts and tools to help users manage their money.
- Fraud protection: Many cards safeguard users against theft and fraud.
Advantages of payroll cards for employers
Payroll cards do not only benefit employees. If you adopt a payroll card program, you can reap major benefits as an employer, including cost savings and more efficient processes. Let’s review the employer advantages of payroll cards.
Cost-effectiveness and efficiency
Printing and mailing paper checks can be expensive and cumbersome. Moreover, checks can get lost in the mail, and employees can misplace or damage them. A payroll card eliminates these headaches. Employing a direct deposit payment structure also eliminates these headaches. However, direct deposit is a problem for employees that lack bank accounts. A payroll card framework bypasses this issue, because pay cards work whether or not your employees have bank accounts.
Streamlined payroll processes
Manually doing payroll can be time-consuming. It entails tracking hours, calculating deductions, writing checks, and more. When you combine a payroll card with payroll management software, virtually everything is automated, including the following tasks:
- Calculating net wages
- Handling pre- and post-tax deductions
- Depositing funds onto employees’ cards
This dramatically reduces the risk of errors and the time spent processing payroll. With a streamlined payroll process, you can focus on what matters most — running your business.
Eco-friendly employee pay method
Moving away from paper checks isn’t just about saving money. It also helps the environment by reducing paper waste. Your company can embrace a more eco-friendly payment method by implementing payroll cards.
Potential drawbacks of payroll cards employers should know
The advantages of payroll cards are clear, but they’re not without disadvantages. Be sure to consider the potential cons discussed below.
Fees and charges
Some payroll card providers charge excessive fees that can eat into your employees’ earnings. Some commonly levied fees are as follows:
- ATM withdrawal fees: Some payroll cards offer free in-network ATM withdrawals, but these may be limited. If an employee only has access to out-of-network ATMs, he or she may be stuck paying an ATM fee every time money is withdrawn. On average, this type of fee amounts to $4.73 per transaction.
- Monthly maintenance fees: Payroll cards do not typically charge monthly maintenance fees, but some do if usage levels are unusually low.
- Transaction fees: Some payroll cards charge per-swipe fees and other small fees that can really add up over time.
Be sure to pick a payroll card provider with a transparent and modest fee structure. Otherwise, you run the risk of frustrating your employees.
Limited acceptance compared to traditional debit cards
Most general-purpose cards are accepted broadly. However, certain store-specific cards or cards on smaller networks may not be accepted everywhere. Work with the payroll card provider to make sure your employees are well-informed of any card acceptance limitations.
Risk of lost or stolen cards
Losing a payroll debit card can be a hassle. Many payroll card providers allow employees to promptly freeze or cancel lost cards, but an unauthorized individual could utilize the card before the employee can freeze it. Most payroll cards will cover any fraudulent charges, but the investigation to recover lost money can take time. You can mitigate this problem by telling employees to physically protect their cards, utilize secure passcodes, and immediately report any losses.
Payroll card is another payment method employers can take advantage of
Payroll cards, while less common than other payment methods, serve a valuable purpose for both employers and employees. For team members without traditional banking relationships, they provide a secure, simple way to receive wages. Most payroll software platforms include this option for unbanked employees. As you grow, it makes good business sense to consider all of your options so you can figure out which payment method aligns best with your organization’s needs and workforce composition.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.