What is a pay card?

Pay cards offer an alternative way to receive wages without the need for paper checks or direct deposits.

Also known as payroll cards or employee debit cards, there are several instances where these cards may come in handy. Here are some examples:

• Seasonal or part-time employees: Seasonal or part-time employees who are not eligible for direct deposit can use pay cards to receive their wages electronically and access their funds immediately.

• Unbanked individuals: Payroll cards may offer a practical alternative for people lacking access to traditional banking services. These individuals can receive their wages electronically, access funds from ATMs, make purchases, and even pay bills online using a pay card.

• Remote workers: Pay cards can cater to workers who may not have a fixed physical location or a traditional workplace.

• General employees: Payroll cards may be an option for workers who prefer to keep their work-related finances separate from personal accounts.

Learn the basics of pay cards in this guide — from how they work to their potential benefits and drawbacks.

How does a pay card work?

Among the many different types of cards available, a pay card functions as a payment card for employees to use their wages. Once an employer loads an employee’s wages directly on the card, the individual can use the card to make purchases both in person and online and withdraw cash from ATMs.

Keep in mind that there may be potential fees associated with ATM withdrawals or card usage. Availability of pay cards may vary depending on employers.

Pay card vs. direct deposit

Some employers may give employees different options to receive their wages, such as direct deposit or pay card.

With a pay card, wages are loaded on a prepaid card, accessible for immediate use for online or in-person purchases. Direct deposit electronically transfers earnings into a bank or financial account, normally without fees. These earnings are then able to be transferred to other accounts or used with cards linked to the account.

Both options have their own pros and cons for employees, so each individual should evaluate what works best for themselves in terms of accessibility and convenience. Learn more about how direct deposit works.

Potential pros and cons of payroll cards

There are several potential advantages and disadvantages to using a payroll card. Here are some examples:

Potential pros of payroll cards

• Speed: Employees can access their wages immediately once their employer has paid them.

• No bank account needed: Payroll debit cards can be a flexible option for individuals without bank accounts.

• Convenience: Pay cards can be used for purchases in store and online, as well as ATM withdrawals and sometimes direct bill payments.

• Accessibility: These cards can typically be used at most places that accept major credit and debit cards.

• Budgeting: Individuals can track and manage their spending.

Potential cons of payroll cards

• Fees: Some payroll cards may have several associated fees. These potential fees may include transaction fees, ATM fees, monthly account fees, lost or stolen replacement card fees, bill pay fees, cash reload fees, and more.

• Replacement delays: Replacing a lost or stolen card could lead to temporary loss of access to funds.

• No ability to earn interest: Payroll cards usually don't earn interest on unused funds.

• Transaction limits: Some cards may impose daily or monthly limits on withdrawals or spending. They also may restrict use for “open-ended” transactions, like paying for gas at a pump.

How to get a pay card

Employers may offer payroll cards to their employees as an alternative to traditional payment methods like checks or direct deposit. Employees can choose to receive their wages through a payroll card when given the option by their employer. This may involve filling out a form or making a selection through an online portal.

Not sure if an employer offers payroll cards? Employees can typically inquire with their company's human resources or payroll department to get more information about the availability of pay cards and the process to receive one.

Learn about managing money with PayPal.