For years, employers seeking to reduce paper in their
payroll departments have encouraged workers to
accept their pay by direct deposit. Most state legisla-
tures, however, have stymied these efforts by requiring
employees to agree to accept their pay via direct deposit,
rather than allowing it to be mandated. While a slight
majority of workers tends to accept direct deposit, most
companies still have at least a few holdouts.
The Pay Card Option
Pay cards may provide a different approach for
employers seeking to decrease the number of paper pay-
checks they must produce on payday. The decrease,
however, would not stem from a difference in how the law
views direct deposit and pay cards. One study shows that
workers who would not opt for traditional direct deposit
actually like the idea of receiving their pay via a pay card.
According to Visa, which announced a national payroll
card program in 2001, employees who were reluctant to
participate in direct deposit payroll plans may accept their
pay via a debit card. Visa found that the card had the
strongest appeal to full-time workers earning less than
$25,000 who currently don’t have a checking account.
Hispanic workers showed a particular preference for pay
cards over direct deposit.
For employers, the procedural difference between
paying workers via direct deposit to a bank account or to a
pay card plan is minimal. Employers using either payment
system generally deposit their payroll into a central bank
account. Workers with pay cards don’t need to set up their
own account. Instead, they access their wages using an
News and reporting on current state and federal legislation and initiatives
BY RITA ZEIDNER
(continued on page 14)
Pay Cards May Help Employers
Through the Legal Maze of
electronic card provided by the employer.
Workers with payroll card accounts can access their
money either from an ATM or when making purchases as