Payroll Debit Cards On The Rise, And So Are Hidden Fees

Claire Gordon
payroll debit cards
payroll debit cards

A McDonald's employee filed a class action lawsuit last week, claiming she was required to receive her wages through a debit card packed with fees. But this is no isolated case. Research shows that more employers are paying workers through debit cards.

According to a 2012 report from the business research firm the Aite Group, $42.8 billion dollars will be loaded onto these cards this year, double what is was in 2010. Employers with seasonal and transient workers, such as in the retail, restaurants, and construction industries, are more likely to use debit payroll cards, in part because their employees are less likely to have a bank account to deposit a paycheck.

On the surface, payroll debit cards are win-win: Companies can reduce the cost of processing payroll and distributing paper checks; and workers without a bank account have easy access to their hard-earned cash, without having to pay the high fees of check-cashing services.

Except many of these debit cards charge fees. Firstly, like regular bank cards, any ATM outside a specific network will charge a couple bucks per visit. But there's often a little something extra too on other transactions.