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Updated Mar 12, 2024

The Pros and Cons of a Payroll Card

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Julie Thompson, Contributing Writer

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Payroll cards are a growing trend among small businesses. They provide easy access to paychecks for employees who do not have a bank account or banking relationship. 

The option of payroll cards is vital for many workers who cannot — or choose not to — open a bank account. Let’s look at payroll card options and the pros and cons of offering them through your business.

Editor’s note: Looking for the right payroll service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

What is a payroll card?

Payroll cards allow employees to access paychecks without setting up a bank account. Instead, they function like debit cards: They are loaded with a paycheck each pay period and can be used to withdraw cash or make purchases. As a result, payroll cards can be an advantageous tool for small businesses with employees who do not have bank accounts or who have limited banking options in their location.

Depending on the payroll card service you select, it may be cost-effective to provide a payroll card option to your workers. Printing and handing out checks can be expensive, and certain payroll companies may charge extra for direct deposit.

Workers must understand the different fees associated with payroll cards, as they aren’t exactly like traditional debit cards. Although a payroll card can be an excellent option for an employee who lacks a bank account, they’ll have to pay some fees, like charges for ATM withdrawals, balance inquiries, fund transfers, monthly maintenance and account closures. The exact costs depend on the payroll card company.

Payroll card pros and cons

Before you decide to offer payroll card options to your employees, make sure you understand the benefits and drawbacks.

Payroll card pros

  • They provide an easy way for employees to access their paychecks without opening a bank account.
  • Lost or stolen payroll cards are easy to replace (for a fee).
  • Workers can access their funds immediately and conveniently.

Payroll card cons

  • Payroll cards do not provide interest.
  • Payroll cards could be lost or stolen.
  • Additional fees apply.
Bottom LineBottom line

Payroll cards benefit employees because they get access to their funds without a bank account and can easily be replaced if lost or stolen. However, payroll cards include fees, may get lost and don’t accumulate interest.

Payroll card providers

Your business can choose from several payroll card providers. Some payroll services offer payroll cards to compensate employees. If you’re working with a primary payroll provider, talk with your representative to determine the best options for your business.

Best payroll services offering payroll cards

At, we researched the best payroll reporting software to find options for small businesses. We examined several factors, such as integrations and employee self-service options, and selected the following payroll services as our best picks:

  • OnPay: OnPay provides several payment options, including payroll cards, direct deposit and physical checks. Employees can set up their preferred way to receive a paycheck through the self-service app, which also provides lifetime access to pay stubs and documents for filing individual taxes. Learn more in our review of OnPay.
  • ADP: We selected ADP for its payroll card integration through Wisely. It also offers direct deposit or printed paper check options. ADP’s Workforce tools allow employees to quickly see their wages and tax statements. Learn more in our review of ADP.
  • Intuit QuickBooks: We chose Intuit QuickBooks because of its diverse selection of integrations that work seamlessly with the platform. QuickBooks offers multiple payment options through integrations such as isolved. Employees can take advantage of on-demand wages, direct deposit and payroll cards through this service. Learn more in our review of Intuit QuickBooks.

Other payroll card providers 

Here are some other options to consider:

  • Money Network: This company offers payroll cards and an intuitive online experience to manage your payroll card offering. It provides enhanced security, flexible deposit options and limited liability. Additionally, Money Network backs all of its funds with the Federal Deposit Insurance Corp. The zero-liability protection means your employees are covered if something happens to their payroll card. The company has over 20 years of experience as a prepaid debit processing company.
  • Netspend Skylight One Card: Netspend is one of the most extensive payment programs in the country and offers flexible enrollment and electronic reporting. It provides an online portal where your workers can view their online deposits and statements. Users can get 100 percent of their wages in cash by using a free Skylight check and cashing it at one of over 8,000 locations nationwide. As a full-service partner, Netspend supports setup, marketing, training and compliance.
  • Rapid! PayCard: This payroll card from Mastercard and Visa offers a 100 percent e-payroll solution for its clients. There are several distribution options, including e-wallet payouts, digital checks and various payroll cards. It offers instant payment and electronic payroll delivery at zero cost. It also provides you and your workers with electronic pay stubs and other convenient features.
  • U.S. Bank: U.S. Bank provides payroll cards to small businesses, making it one of the few major banking institutions that back payroll card initiatives. U.S. Bank’s payroll card offering, called Focus, includes fraud protection, online purchasing and 100 percent electronic payments. It also provides text and email alerts, cash-back rewards programs, savings account features and a mobile app.
  • Wisely by ADP: Wisely is a payroll card provider backed by ADP, one of the most extensive payroll processing and HR management companies in the United States. It offers no-fee cash access at ATMs and banks, as well as cash back at retailers. Wisely has a mobile app for managing funds. The company also offers multiple sources of funding so you can connect other paychecks or tax refunds to your Wisely account. It’s compliant in all 50 states and has high-level support for small companies.

Payroll card alternatives

If your business offers your employees payroll cards, you also must provide an option for direct deposit or paper checks to be compliant with labor laws. 

These are some payroll card alternatives to consider. Some require the employee to have a bank account, while more traditional methods accommodate the unbanked.

Direct deposit

Direct deposits, one form of an ACH transfer, allow your employees to receive their paychecks electronically. Employees provide their checking or savings account information during the onboarding process. You use this information to transfer employees’ pay directly into their bank accounts.

Although employees need a bank account to take advantage of direct deposit, it has advantages: It eliminates the need for paper checks, and your workers can cut down on trips to the bank.

Did You Know?Did you know

Direct deposit is the most common form of payment from employers to employees in the U.S. Nearly 94 percent of employees use direct deposit to receive their paychecks.

ACH transfer

In the 1970s, the Automated Clearing House (ACH) improved how money was electronically transferred between banks. It not only solved the onslaught of paper checks but featured bank-level encryption to reduce fraud. 

ACH provides a direct link between two bank accounts. ACH transfers can be grouped between the two banks, and all transactions are held and checked before bulk processing. There are two ACH transfer types: ACH direct deposit and ACH direct payments.


PayPal has become a top alternative for companies that hire freelancers and contractors. Whether you employ one-time, seasonal or part-time workers, PayPal can eliminate the need for paper checks and pay cards.

Contractors can invoice you directly through PayPal to help keep your books accurate. When you send a payment, check the Service box. This option will correctly categorize the payment, apply appropriate fees and provide an instant payment option for the freelancer. 

Mobile wallet

As the number of smartphone users continues to rise, so does the access to mobile payments. According to Statista, 2.8 billion people globally use mobile payments.

Indeed, Americans are increasingly adopting contactless payments. As more and more banks focus on digital payments, employees can upgrade their traditional direct deposit for instant pay through Cash App, Venmo, PayPal, Apple Pay, Google Pay and Zelle. [Read related article: Mobile Wallet Guide: Google Pay vs. Apple Pay vs. Samsung Pay]

Paper checks

Despite the array of digital payment options, paper checks are still widely used among small and midsize businesses. These companies lack payroll software and view paper checks as a trusted payment method. 


Cash is a legal way to pay your employees, but it’s not generally preferred. Although you may save on fees, spending cash is tedious because you must manually track accounting for your business. This can lead to human error, IRS audits and disgruntled employees. It also requires frequent trips to the bank to handle cash shortages and exact change. Once all of the workers’ paychecks are calculated, you must deliver each one by hand. 

TipBottom line

Rather than paying employees with cash, which is time-consuming and prone to errors, you would be better served by a low-cost payroll system.

Payroll card FAQs

Payroll cards and debit cards have some similarities, but they are not the same. Payroll cards are issued by employers and aren’t linked to a bank account. You can’t overspend on a payroll card, since it works more like a gift card than a bank card.

Debit cards are provided by a financial institution and are a way to use your automatically deposited bank account funds on the go. You can overspend on a debit card, and your linked bank account can incur overdraft fees.

Tip: If your company offers wages by payroll card, keep current on the latest security features to protect your employees’ money and personal information. Payroll cards offer some level of fraud protection, but not all cards provide the same amount. Seek out payroll card companies that offer a zero-liability policy, real-time transaction alerts, chip technology and account monitoring.

No. Despite the growing popularity of payroll cards, federal banking laws require businesses to offer employees at least one additional payment option. Payroll cards generally cost a company up to $7 per month per employee, whereas paper checks can cost upward of $20 per employee per month.

Given the high cost of paper checks, direct deposit is usually the second option. However, employers may offer more than two forms of payment. Each state retains the right to regulate the specific methods of payment provided for employees.

Payroll cards are generally accepted anywhere you would typically use a standard bank account debit card. They hold the same buying power as bank cards and can be used at stores, gas pumps and ATMs.

Cash can be withdrawn at ATMs or via a cash-back option at grocery or retail stores. Payroll cards can also be used to make payments on any websites that would accept the same debit card brand.

The ability to deposit money on a payroll card depends on the provider’s services. Some cards offer the option to add cash at a money exchange center or ATM, while some do not. Review your provider’s terms to see if this option is available.

Determining whether direct deposit or a payroll card is better for your business depends on your situation and preferences. If most of your employees do not have a bank account, it may be easier and cheaper to use payroll cards.

Payroll card fees can add up. Some cards have very few associated fees, while others charge a fee for regular monthly use, like withdrawing funds from an ATM. Also, only some cards offer the option to deposit non-payroll money onto them.

Transferring money from your payroll card to a bank account can be complicated or straightforward, depending on which payroll card provider you choose. Some services build it into their offerings, while others require you to call the bank or payroll card provider.

Payroll cards: the inclusive way to pay

Payroll cards are an ideal option if you’re looking to save money on processing payroll. They are also a vital tool for employees who don’t have bank accounts. 

Most large payroll processing companies offer small businesses a payroll card option. Additionally, a host of third-party companies can provide independent payroll card services.

Payroll cards can be a great way to securely compensate employees while saving money on direct-deposit fees and paper-check overhead. However, you should know the costs and conditions associated with payroll cards. You should also offer a payroll card with an online portal or mobile app.

The best payroll card option for your business depends on your workers, your company’s needs and the overall cost.

Matt D’Angelo contributed to this article.

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Julie Thompson, Contributing Writer
Julie Thompson is a professional content writer who has worked with a diverse group of professional clients, including online agencies, tech startups and global entrepreneurs. Julie has also written articles covering current business trends, compliance, and finance.
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