Employees Increasingly Paid by Prepaid Cards

detectiveconan16

detectiveconan16

CAGiversary!
Feedback
46 (100%)
I know some of you CAGers have experienced this already, especially when you work at Gamestop or McDonald's, or Taco Bell. The NY Times reports that this is an increasing trend among employers because it's "supposedly" cheaper for them, even though they are cards that come with fees.  Some employers may let you opt out for direct deposit as the only other option, but it seems the scheme gives them a bonus for signing up each additional employee.

I personally think it's an awful practice, and have seen this with some fellow students with their financial aid money.  If you don't cash out once a month, it's going to cost about $40 out of your paycheck, according to the article.  One subject in the story had to keep all her months wages in cash, just like our parents did when they struggled to earn a living.

If we barely trusted banks after the financial crash, why would we continue to let them play with our money for the sake of convenience?

 
What do you propose...?

Money is nothing more then the value we associate with it, when its basically paper with ink or some cheap metal stamped with a face on it ...

But digital currency will soon be the NWO, in the name of safety...

Banks love digital currency, no LABOR cost

 
I suppose it's better than paying you in Gamestop gift cards :)

My place of employment recently stopped giving physical pay check stubs if you have direct deposit.  I'm one of the very few there who still gets their live paper check so I had to watch as almost everyone else was up in flames about having to log onto a new system that barely works just to see their paycheck info (pay, taxes & medical deductions, etc).

 
detectiveconan16 said:
I know some of you CAGers have experienced this already, especially when you work at Gamestop or McDonald's, or Taco Bell. The NY Times reports that this is an increasing trend among employers because it's "supposedly" cheaper for them, even though they are cards that come with fees. Some employers may let you opt out for direct deposit as the only other option, but it seems the scheme gives them a bonus for signing up each additional employee.

I personally think it's an awful practice, and have seen this with some fellow students with their financial aid money. If you don't cash out once a month, it's going to cost about $40 out of your paycheck, according to the article. One subject in the story had to keep all her months wages in cash, just like our parents did when they struggled to earn a living.

If we barely trusted banks after the financial crash, why would we continue to let them play with our money for the sake of convenience?
Click to expand...
Most Americans didn't do much at all after the financial crash. They laughed at those of us who protested and took our money elsewhere and seem to hate on anything that protects workers' rights so I'm not too optimistic that they will do anything about this either.

 
detectiveconan16 said:
I know some of you CAGers
Click to expand...
CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.
 
UncleBob said:
CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.
Click to expand...
http://abcnews.go.com/Business/mcdonalds-worker-sues-franchise-paying-wages-debit-card/story?id=19420181#.UdN8zti0R4o

This is a deal between the banks and the companies that implement them... anything to squeeze more money out of poor people.

 
has a $1.50 fee for ATM withdrawals, a $10 inactivity fee after 90 days, and a 75 cent online payment fee per transaction and other fees.
Click to expand...
I guess I need to know what those "other fees" are.

You can't withdraw a paper payroll check from the ATM, so no issue with that fee.
I'd prefer the inactivity fee to kick in after 180 days - but friends tell me that most payroll checks are only good for 90 days anyway.
Can't make online payments with a paper payroll check, so no issue there.

Can I take this card, go into any reputible bank, and just like a paper check, walk out with 100% of my money (short of whatever fees that individual bank may charge, which they also do with paper checks?)

This article doesn't make that clear.
 
UncleBob said:
CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.
Click to expand...
Just like ATM machines and MSDS sheets :)
 
UncleBob said:
CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.
Click to expand...

UncleBob said:
I guess I need to know what those "other fees" are.

You can't withdraw a paper payroll check from the ATM, so no issue with that fee.
I'd prefer the inactivity fee to kick in after 180 days - but friends tell me that most payroll checks are only good for 90 days anyway.
Can't make online payments with a paper payroll check, so no issue there.

Can I take this card, go into any reputible bank, and just like a paper check, walk out with 100% of my money (short of whatever fees that individual bank may charge, which they also do with paper checks?)

This article doesn't make that clear.
Click to expand...
I have no problem with you changing your mind, but you contradicted yourself within 5 hours of your previous post.

I believe you can withdraw the whole check from a bank minus a fee.

Unlike a check, you cannot deposit your bank card into an account. You must first withdraw the cash and pay the fee, afterwich you may deposit your cash. Do you see the problem there?

 
willardhaven said:
I have no problem with you changing your mind, but you contradicted yourself within 5 hours of your previous post.

I believe you can withdraw the whole check from a bank minus a fee.

Unlike a check, you cannot deposit your bank card into an account. You must first withdraw the cash and pay the fee, afterwich you may deposit your cash. Do you see the problem there?
Click to expand...
The only thing I contradicted was the 90/180 day thing - and that was because I wasn't aware most payroll checks are only good for 90 days.

I can take a payroll card to a teller at my bank and have them withdraw the entire balance - with no fees from the bank, because I have an account there. I can then deposit that money into my account.

This article does not describe any fees associated with withdrawing the cash outside of an ATM withdraw. If there's a fee on the card itself for going to the teller and getting the money, then I object to it. That simple.
 
bshirk said:
Most Americans didn't do much at all after the financial crash. They laughed at those of us who protested and took our money elsewhere and seem to hate on anything that protects workers' rights so I'm not too optimistic that they will do anything about this either.
Click to expand...
This^. Lazy and intellectually lazy is what we are.

 
UncleBob said:
The only thing I contradicted was the 90/180 day thing - and that was because I wasn't aware most payroll checks are only good for 90 days.

I can take a payroll card to a teller at my bank and have them withdraw the entire balance - with no fees from the bank, because I have an account there. I can then deposit that money into my account.

This article does not describe any fees associated with withdrawing the cash outside of an ATM withdraw. If there's a fee on the card itself for going to the teller and getting the money, then I object to it. That simple.
Click to expand...
The article was unclear. I looked up some examples and it seems your bank has to be a "member" of the credit card brand associated with your pay card. If not you are probably on the hook for some kind of fee.

You are incorrect about paychecks. You must be issued a new check by your employer after the check "expires" (which it doesn't). They cannot charge you a fee for not depositing the item in a certain time frame.

On a side note, I'd love to know the eventual environmental cost to the public for disposing of these cards. I know when I worked in a bank we had plastic recycled with paper shreds via a third party vendor. I doubt most workers will be able to recycle theirs.

 
willardhaven said:
The article was unclear. I looked up some examples and it seems your bank has to be a "member" of the credit card brand associated with your pay card. If not you are probably on the hook for some kind of fee.

You are incorrect about paychecks. You must be issued a new check by your employer after the check "expires" (which it doesn't). They cannot charge you a fee for not depositing the item in a certain time frame.

On a side note, I'd love to know the eventual environmental cost to the public for disposing of these cards. I know when I worked in a bank we had plastic recycled with paper shreds via a third party vendor. I doubt most workers will be able to recycle theirs.
Click to expand...
I can't imagine the impact of creating, distributing, and disposing the cards after a period of time would be more than the impact of creating, distributing and disposing of paper checks every week/every two weeks.

Perhaps "expires" isn't the right word, but I was always under the understanding that "Void after 90 days" (or some such text) on the check means just that - the paper is no longer valid. I was unaware that an employer has to reissue a check... does this mean that if I get PO'd at my boss, quit, then get a check for my final pay period.... and I can make them reissue it every other week, at their cost? And they'd be on the hook for the stop-payment fee on the old checks? Seems like an unfair hassle for the employer.

Anywhoo, my knowledge of these paycards is limited, as I do get direct deposit every pay period - my initial stance still stands - if the employee can reasonably empty the balance of the card - at once and without any fees charged by the card at any major reputable financial institution, then I don't have a problem with them. If an employee cannot do this, then the card is not a proper way to pay the employee. Not a fan of the inactivity fee - I'd replace it with a system where if the card is inactive for a period of time, then the card issuerer will cut a check to the employee via the address they have on file and terminate the card.

As for all the other fees (online bill pay, ATM fees, swipe fees, etc.)... Don't use the payroll card like a debit card and you won't have that issue.

 
I have never heard of someone abusing their employer's obligation to pay them before. I would imagine after a few attempts to pay you they would try to wire the money to an account that you provide. I think the employer can just turn it over to the state. It's funny how quick you are to mention an unfair burden on employers while forcing employees to carry a piece of plastic to receive their money isn't a problem.

I read into it a little more and it seems these are reloadable cards, not disposable ones. That's how the employers save money on the deal.

They're very sketchy as it's essentially an account you have to keep track of. If you "overdraw" your pay card you receive penalties as well.

I would opt for direct deposit but 1/4 households do not have a bank account.

 
willardhaven said:
They're very sketchy as it's essentially an account you have to keep track of. If you "overdraw" your pay card you receive penalties as well.
Click to expand...
Again, if you can just dump the card each week/biweekly, then it's just like a paycheck, right? If *you* choose to use it like a debt card, isn't that your choice?
 
Curious - do you feel that an employee should be able to demand their pay in cash, in stead of a check or pre-paid debit card?
 
Do you think the law should require that an employer pay the employee in cash at their request? I guess that's what I'm getting at. Hell, an employee can demand that the employer pay them in moon dust from Mars. ;)
 
Of course not. Currently it is not illegal to use these debit cards... I suspect that may change though as it should.

 
Last edited by a moderator:
Aside from the legality of it, why are you okay with employer paying an employee with a paper check? If an employee is one of the unbanked, then the employee is unlikely to be able to be able to get the check cashed without a fee.
 
Last edited by a moderator:
So... you're less concerned with employees having to pay fees to get their money and more concerned with employees being forced into 'the system'?

What are your thoughts on receiving benefits from the government on a pre-paid debit card?
 
I am fine with the cards if they are not loaded with fees and also contain a weekly statement w/ an account balance or a way to check your balance easily. They also should be free to replace if you lose them.

Do you see how this is different from a normal pay check or cash? It is more complicated and creates an unnecessary hassle for the employee.

I don't know where you are going with benefit cards. Are those loaded with penalty fees too?

Your employer does not get to make you open a bank account. Even if they call it a pay card.

If these were optional then there really is no problem there either (unless employees receive improper disclosure). I am basing my opinion on what I read in those several articles so I'm sure these systems vary.

 
Last edited by a moderator:
I just don't see how it's more complicated for an employee. Go into the same types of places you'd go to cash your check, unload the card and done. That simple.

Yes, government benefits loaded onto pre-paid cards enjoy the same types of fees that payroll checks on pre-paid cards do.

http://about.bloomberglaw.com/practitioner-contributions/an-economic-analysis-of-government-sponsored-debit-card-tax-refunds/

Data from the federal MyAccountCard pilot program give some idea of the average variable fees incurred by users who chose to participate. The Urban Institute analysis of that program reports that individuals paid an average of $5.11 per month in variable fees during the time when the card was in use. Individuals who used the debit card for more months incurred fewer monthly fees; for instance, among those taxpayers who used their card for at least six months (through July 2011), monthly charges were $3.16 on average and thus represent an average of $19 paid in fees. Most of these fees resulted from ATM usage fees.
Click to expand...
The benefits cards would also force people into 'the system', just the same as a payroll card.
 
These are essentially crappy bank accounts that employees are forced to have to be paid by their employer. If they are an option that's fine (just like direct deposit). I would have a problem with an employer requiring direct deposit as well (even though I prefer it).

As far as the MyAccountCard government program you linked, paper check is still an option isn't it? If it's required and features the same batch of fees, then it's just as bad.

 
If you just pull all the cash out each pay period, then it's essentially nothing.

In the article I linked to, it discussed several types of government programs where money is distributed via pre-paid debit cards. Including some states which required tax refunds to be paid out via pre-paid cards or direct deposit.
 
There are fees to find out how much is on the card. There are fees to move the money into a checking account. There are fees for "statement reprints" (is that just your payroll stub or is that still free?). There are fees for not using your card. A fee for closing your account (is that if you lose your card?). Some employers are not disclosing that these cards are optional as well.

Payroll cards are not offered by banks to reduce payroll costs out of the kindness of their hearts. They are predatory instruments to make up for "lost revenue" after Dodd-Frank limited how much the banks can squeeze customers. People are largely uneducated on navigating bank and credit card company policies, so the cards are the perfect way to accomplish the banks' hunger for profit.

I use direct deposit when I can, I also have a moderate degree of financial education. I recognize that not everyone does so what is "essentially nothing" to me might be a big problem for others.

Also, there is no way in hell I would accept a charge of $104.00 a year (52 weeks @ $2.00 per withdrawal) to access my pay.

We can move on to debate the merits of for-profit banking, but I don't think this is the thread for it.

 
Last edited by a moderator:
willardhaven said:
There are fees to find out how much is on the card. There are fees to move the money into a checking account. There are fees for "statement reprints" (is that just your payroll stub or is that still free?). There are fees for not using your card. A fee for closing your account (is that if you lose your card?). Some employers are not disclosing that these cards are optional as well.
Click to expand...
I can't speak for every place of employment, but the ones I'm familiar with, your pay stub is an entierly different document than anything to do with the pre-paid card.

If you withdraw the balance of the card each pay period, then you don't need to find out how much is on the card (you review your paystub). You deposit the money into your checking account with no fees (wait, the employee has a checking account? that means they're in 'the system'!). If you empty the balance of the card, you won't really need statement reprints (again, different than a pay stub). If you're getting your pay deposited onto the card and them withdrawing it each period, then the card isn't inactive, and thus, no fees. If the card is empty when you're done with it (as it would be, since you're getting the balance off at every pay period, right?), then they can't charge you a fee to close it, as there's no way to get the money.

If you think $2 from an ATM is bad, look into the cost of cashing a payroll check for one of the unbanked. Some places charge a flat fee ($3-$10). Some places charge a percent (1% of a, say, $500 paycheck being $5). Thus, by the logic of 'an employee shouldn't have to pay fees to get their money', the employeer should be required to pay in cash on demand, right? That's virtually the only way for an unbanked individual to get their money without any kind of fees.
 
There is not a slew of fees attached to a paycheck. 

Employees are clearly getting charged a bunch of fees for using their card. Do you think there might be a disclosure problem? Maybe they can't access a bank. ATMs only deal in $20s for the most part. I guess the employees could carry around a check register with them to keep track of things...

How does the inactivity fee work? They might be charging these people for not using the debit function. You seem to like hypothetical situations so there you go.

Once again I am fine with this being an option. It should not be allowed as the default option. Employers should not be able to forget to mention conventional checks or direct deposit if those are available.

 
Last edited by a moderator:
You just mentioned check cashing businesses. They might be able to sign over their check at the food store as well.

Hell, growing up my employers used to cash paychecks for me free of  charge.

 
Last edited by a moderator:
You're going around in circles. Check cashing fees are pretty well established. They are not hidden although they are highly abusive of low-income workers and their neighborhoods.

The point is that these cards are a vessel for a large amount of fees. They are not all clear-cut and they add up to a significant amount. So much so that local governments are taking notice and reviewing the practice.

I believe McDonald's stopped forcing them on employees after the lawsuit started.

I don't think people should have to pay abusive fees. Checks are not abusive monetary instruments. Some of these pay cards are.

So you have stated you support them, I have stated why I do not... why do you keep dragging this thread out?

 
Last edited by a moderator:
...because you keep replying to me with questions?

The cards are only "a vessel for a large amount of fees" if you use them that way. If you empty the balance of the card at the end of each pay period, then no harm, no foul, right? (and any card that doesn't allow you to do that is something I do not support).
 
I would gather you cannot get the balance off the card each week if you are using an ATM. They are confusing and seem to be profitable for their administrators.

 
Last edited by a moderator:
Can you take one of these to the check cashing place? If you can't, how do you feel about that?

As I understand, you have a problem with these being the only pay option without direct deposit as an alternative, correct?

How do you feel about improper disclosure of the fees charged?

 
Last edited by a moderator:
1) I don't know - I've never personally used a payroll card or a check cashing place.

2) I have no problem with them so long as the employee can take the card to any reputable financial institution and receive the entire balance of the card (minus whatever fee the individual institution may charge, just as they do with a check) and if doing this every pay period does not trigger any additional fees or penalties. This can be offered as a part of a combination of other offerings (cash, paper check, direct deposit) or can be the singular offering, so far as I'm concerned. As for all the other fees (additional fees for using an ATM, paying bills with the card, etc.) - if you don't like them, don't use those services.
*edit* - also not a fan of inactivity fees on the card based on the idea that the checks never really expire and that employers must reissue checks for infinity... but I have an issue with that idea as a whole.

3) Depends on what you're defining as "improper disclosure". If it's "I didn't read the pamphlet that came with it", then I'm not really that concerned about it. If it's "I read the pamphlet and it didn't say anything about getting charged every time I called this 800 number to get my balance." or "I didn't get any kind of pamphlet at all.", then I do take issue with that.
 
Last edited by a moderator:
What about McDonald's offering only the card, which may include a fee even if you take it to your own bank for deposit?

I don't know what the pamphlets look like, I don't eve know if they give you a disclosure booklet.

 
Last edited by a moderator:
UncleBob said:
*edit* - also not a fan of inactivity fees on the card based on the idea that the checks never really expire and that employers must reissue checks for infinity... but I have an issue with that idea as a whole.
Click to expand...
Checks are subject to the discretion of bank policy. Most of them adhere to the "90 days" notes on the checks but the check is still valid. Employers turn money over to the state that they can't pay after making a reasonable effort. I don't know where you got the infinity idea from. If you lose your check and forget about it, your employer does not get to keep the money.

 
Last edited by a moderator:
willardhaven said:
What about McDonald's offering only the card, which may include a fee even if you take it to your own bank for deposit?
Click to expand...
Is the fee charged by the card for taking the money off of it? If so, do not like.
Is the fee charged by the bank for perfmorning the transfer? If so, get a better bank.

I don't know what the pamphlets look like, I don't eve know if they give you a disclosure booklet.
Click to expand...
The one I've seen is an entire booklet full of information no one ever reads.
 
I don't think we're that far apart on the matter honestly.

Though I dislike the idea forcing an employee to become a customer of a specific bank just to get paid, I am not sure if it's illegal.

On a personal level, I have seen how annoying the state-issued debit cards are, but they allow for direct deposit in order to avoid the nuisance.

 
Agreed. I don't think either one of us has an unreasonable position.

A lot of my personal dealings (not in 'I have used one', but 'I've dealt with people who have used one') comes out of my employer, who offers the cards, direct deposit, or paper check (there was a short period where they were saying we could no longer get a paper check, but apparently they can't do that in Illinois, so went back to offering them, but they strongly encourage the card or deposit.

Obviously, this wouldn't work for a lot of businesses, but at my employer, you can take the card directly to the front desk and get the entire balance off-loaded, with no fees or charges. For the un-banked, it's better than a check, since you can come in at midnight on payday and get your money. I have direct deposit and I can't even do that.

I think that's why I'm a little more willing to accept them (based off what they *can* be)... it has the potential to be a pretty straight-forward process.
 
Last edited by a moderator:
You must log in or register to reply here.
bread's done
Back
Top