Employee FAQs

Frequently asked questions about paycard characteristics, benefits, and how they work.

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Answer: A paycard is a reloadable prepaid (i.e., stored value) card issued to an employee through a national or regional bank, credit union, or savings and loan association on behalf of his or her employer for the receipt of wages and other compensation. Paycards are also referred to as “payroll cards” and “payroll debit cards.”

Each payday, the paycard account is electronically loaded with the full amount of the employee’s net pay. The employee can then use the card to withdraw cash from an ATM or bank teller, make point of sale purchases, receive cash back from point-of-sale transactions, make purchases by mail, phone or Internet and pay bills online. Some programs offer additional features as well.
Answer: Most paycards today are branded, meaning that they bear the logo of a major payment brand such as Visa, MasterCard or Discover. Branded cards are widely accepted and offer employees greater flexibility and utility.

Branded paycards can be used to make both signature- and PIN-based purchases at merchant locations worldwide. They also can be used to pay bills over the Internet or by telephone, and to make ATM withdrawals.

Unbranded paycards may be used for cash withdrawals at ATM machines or for transactions at any establishment which has a PIN-pad device, such as purchases at retail outlets, grocery stores and convenience stores. Unbranded paycards cannot be used to make purchases or pay bills online or over the telephone.

Both branded and unbranded paycards can be used to obtain cash back at participating merchants if the transaction is a PIN debit transaction.
Answer: There are many reasons why an employer might decide to offer paycards to its employees. Electronic wage payment benefits employees as it is more secure, more reliable and more convenient than paper paychecks. Moreover, in many cases, electronic wage payment is less expensive for employees than paper paychecks. Unbanked and underbanked workers who receive paper paychecks often turn to costly alternative financial services like check cashing establishments to access their wages and then purchase money orders to pay their bills.

Although direct deposit offers a solution for many workers, a surprisingly large number of employees are unable to participate in direct deposit because they have little or no access to traditional banking services. Offering paycards as a complement to direct deposit allows employers to provide the benefits of electronic wage payment to all of their employees even those who do not have personal bank accounts.

Employers also benefit directly from paying their employees electronically. It takes a significant amount of time and resources to prepare, process and distribute paper paychecks. Even then there is no guarantee that employees will receive their wages on payday. Payroll checks can get lost in the mail and delivery can be delayed due to severe weather conditions. Electronic pay methods allow employers to save time and money while ensuring that all of their employees receive their wages promptly on payday. In fact, many APA members recently reported that paycards helped them deliver wages and other assistance to workers affected by Hurricane Sandy.

Finally, electronic wage payment is environmentally friendly. As such, many employers offer paycards as part of their sustainability initiatives.
Answer: Paycards bring the benefits of electronic wage payment to employees who otherwise are unable to participate in direct deposit because they have little or no access to traditional banking services. These benefits include:

*Fast and easy access to wages on payday even when the employee is away from the workplace (e.g., working remotely, on vacation, out ill, etc.).

*Prompt delivery of wages even during extreme weather conditions and natural disasters that often impede the delivery of paper checks using ground or air transportation.

*Time savings and increased efficiency as employees no longer need to wait in line to deposit or cash their paper paychecks, wait for the check to clear or take the time to purchase money orders to pay their bills.

*Cost savings as employees are provided many ways to access their wages from the card thereby eliminating reliance on expensive check cashing services.

*Increased security as employees no longer need to carry around large amounts of cash.

*Increased convenience as paycards allow employees to make purchases by mail, phone or Internet, and to access cash from a bank teller or ATM and through cash back from point-of-sale transactions.

*Financial empowerment as paycards offer unbanked employees with a pathway into the financial mainstream.

Paycards also offer benefits to employees who have bank accounts. Paycards can help banked employees manage their finances by allowing them to split their wages into separate accounts or “purses.” For example, banked employees can have a portion of their wages directly deposited into a savings account each pay period while having the remaining amount loaded onto a paycard. The amount loaded onto the paycard represents the employee’s spending money for the period, while the amount directly deposited allows the employee to save for future needs.
Answer: There are several ways to access cash from your paycard account. You can use your card to make ATM withdrawals (check your card materials to find ATMs that provide free withdrawals). You also can receive cash back from point-of-sale purchases. This is true whether or not your card is branded. If your program offers convenience checks, they can be filled out for the amount of your net wages and cashed at specified locations.

In addition, if you have a branded paycard you can obtain your full wages in cash from the teller at any financial institution that is a member of the payment brand (i.e., Visa, MasterCard or Discover), not just at the financial institution that issued the card. For the major payment brands, this means tens of thousands of bank branches nationwide.
Answer: Branded paycards can be used anywhere that the payment brand (e.g., Visa, MasterCard or Discover) is accepted. This includes millions of stores, restaurants and other businesses worldwide. Branded paycards also can be used at ATMs and at any financial institution that is a member of the payment brand.

Unbranded paycards can be used wherever the merchant offers a swipe pad with PIN entry, such as grocery stores, discount stores, drug stores, and thousands of others. They also can be used at specified ATMs.
Answer: No. A credit check is not required. Your credit history, whether good or bad, does not affect your ability to receive wages on a paycard. Your card provider may need to verify your identity, however, using certain identifying information such as name, address, date of birth and personal identification number.
Answer: Most paycards are personalized with the employee’s name. Some programs offer cards without the employee’s name embossed on them, however. These cards are commonly referred to as “instant issue” cards. Instant issue cards can be quickly assigned to a specific employee for immediate use such as when an employee loses his or her personalized card. These cards have the same functionality as personalized cards.

Employers that offer instant issue cards often allow employees to request a personalized card that is usually sent to them in the mail.
Answer: When personalized cards are used, the card provider (also referred to as the program manager) either will send the card to the employer for distribution or mail the card directly to you. Employers that offer instant issue cards keep a ready supply on hand and are able to provide them to employees immediately.
Answer: Yes. Paycards are meant to replace paper paychecks, not direct deposit. An employer that elects to eliminate paper paychecks by offering paycards must also offer its employees the option of receiving their wages by direct deposit into a personal checking or savings account designated by the employee. An employee that initially chooses the paycard option may later switch to direct deposit.
Answer: A common misconception about paycards is that employees incur fees whenever they use their cards. This simply is not the case. All programs provide employees with multiple ways to use their cards and to access cash off their cards without incurring fees.

You can use your branded paycard without issuer fees anywhere that debit cards bearing the payment brand’s logo (e.g., Visa, MasterCard or Discover) are accepted, including millions of merchant locations in the United States and millions more worldwide. You also can use your card to receive cash back from merchants when making purchases.

Certain fees may be incurred depending on how you use your paycard; however, most (if not all) of these fees are avoidable. Please check your card materials for the card’s fee schedule.
Answer: Most programs provide employees with several methods of checking their paycard account balance. Depending on the particular program, you may be able to access your account balance using one or more of the following methods:

*Calling a toll-free customer service number (automated system and/or live representative),

*Accessing the information over a secure Internet or intranet,

*Performing balance inquiries at an ATM, or

*Receiving text alerts sent to the employee’s cell phone. Note: depending on your phone plan, you might incur charges from your mobile provider.

Fees vary from program to program but there is always at least one way for you to check your account balance without cost.
Answer: If your paycard is lost or stolen, you should immediately call customer service and report the card as lost or stolen. The card will be deactivated and you will be provided a new card with the full remaining card value. The exact procedures will vary depending on the particular paycard program. Some employers maintain a stock of non-personalized instant issue cards on the premises that can be provided to you immediately upon report of a lost or stolen card. If instant issue cards are not available, a replacement card will be mailed to you.

Please check your card materials for the fee schedule to determine if there is a fee for a replacement card.
Answer: Most paycard transactions require preauthorization to confirm that funds are available. Therefore, in most instances you should only be able to spend funds that have been loaded onto your paycard.

There are situations where delays in transaction processing could result in an overdraft if you do not monitor your spending, however. For example, some retailers still make card imprints or obtain payment authorization on paper for later processing. A paycard can be overdrawn if you make a subsequent purchase exceeding your balance before the offline transaction is processed.

The above situation is beyond the control of the card issuer or paycard provider. Therefore, it is imperative that you take responsibility for knowing the available balance on your paycard. If you do accidentally spend more than is in your paycard account, the account will show a negative balance until the next deposit covers the deficit.

A financial institution may not charge you if it pays for ATM and one-time debit card transactions that exceed your account balance unless you have specifically consented to the service.
Answer: Yes, you will have access to information regarding transactions to and from your paycard account. The issuing financial institution will provide you with account information in one of two ways. First, the institution may provide you with periodic statements showing information about each transfer that was credited or debited to your account. If this option is used, a periodic statement will be sent for each monthly cycle in which an electronic fund transfer has occurred, and at least quarterly if no transfer has occurred.

Alternatively, the financial institution may make all of the following information available to you: (1) your account balance, through a readily available telephone line; (2) an electronic history of your account transactions, such as through an Internet website; and (3) a written history of your account transactions provided promptly in response to your oral or written request.

Regardless of which alternative the financial institution uses, all programs provide employees with one or more ways of checking their account balances without cost.
Answer: Yes. Most states require that employees receive a statement of earnings and/or deductions (i.e., a "pay stub") from their employer each pay period regardless of the method used to pay wages. This is separate from the transaction histories provided by the issuing financial institution.

Some employers distribute paystubs electronically.
Answer: Most, if not all, paycards are issued by federally insured financial institutions and, therefore, the funds in the account are insured in the event of a failure. Please check your program materials for details.

NOTE: The National Credit Union Administration (NCUA) is the independent federal agency created by the U.S. Congress to regulate, charter, and supervise federal credit unions.
Answer: Yes. Method of wage payment does not impact whether an employee's wages are subject to garnishment. An employer must comply with a court order directing it to withhold or "garnish" amounts from an employee's wages for the payment of a debt. State and federal law regulate the amount of money that may be garnished from an individual's wages and should be consulted for guidance.

In addition, after your wages have been paid, a creditor may seek to "levy" the funds in your account. A paycard account is subject to levy to the same extent, and pursuant to the same procedures, as your personal bank account.
Answer: Yes. You must notify the financial institution of a suspected error within a specified time period, at which point the institution is required to promptly investigate the matter and determine whether an error occurred.

If the investigation reveals that an error did occur, the financial institution must correct the error. If the investigation reveals that no error was made, the financial institution must provide you with a written explanation of its findings, including your right to request copies of the documentation relied upon by the institution in making its determination.

You should consult your employer and/or the Terms and Conditions of the paycard program for more details.
Answer: This will depend on whether your paycard is portable (i.e., whether it will accept loads from sources other than your current employer). If your employer offers portable cards, you will be able to keep the card when you change jobs and to arrange for a subsequent employer to credit your net earnings to the card through direct deposit. You also will be able to accept loads from other sources such as tax refunds.

If your card is not portable, you will be able to keep the card when your employment ends and to use it to access the funds loaded onto the card by your initial employer. You will not be able to load additional funds from a new employer or from other sources, however.
Answer: Employees usually are not able to access their full wages from an ATM withdrawal. This is because most banks limit the amount of money that may be withdrawn from an ATM in one day. The limit is not waived for payroll cards. In addition, ATMs only disburse cash in $5, $10 or $20 increments, meaning that employees cannot access their wages “to the penny” from an ATM machine.

To satisfy the wage payment statutes in most states, payroll card programs must provide employees with other methods of cash access. For example, an employee may take a branded payroll card (i.e., one bearing a Visa, MasterCard or Discover logo) to the bank teller at any bank that issues that brand of card and obtain his or her full wages from the teller, without cost, at least once each pay period. Most programs offer other methods of cash access including convenience checks, cash back from purchases and/or money orders.

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