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Thinking of using payroll debit cards? Read this first

debit card hand

Loading paychecks on to debit cards for employees is a popular practice for restaurants trying to reign in costs. The cards eliminate the need for paper and postage, saving companies thousands of dollars. Employees also like the convenience of not having to go into work on a day off to get their paycheck. And those without bank accounts are spared the hassle of cashing a check.

However, operators advise some caution when rolling out a payroll debit card program. About 5.8 million workers nationwide received their wages on payroll cards in 2013 and that number is expected to rise to 10.8 million by 2017, according to a 2014 report by New York State Attorney General Eric Schneiderman. That same study found that cardholders were being charged fees for basic tasks such as withdrawing cash, point-of-sale transactions and using customer service. Employees also were not being advised on ways to avoid fees associated with the cards.

Concerns about fees that target low-wage earners has led to proposed legislation and rules for regulating payroll cards popping up in states such as New York, Illinois and Washington. The upshot for restaurant owners: Look for no-fee options, low-fee cards and educate employees on how to use them.

Slim Chickens uses a pay-card system with 1,600 ATMs employees can freely use, and some retailers, such as Walmart, allow employees to withdraw 100 percent of their funds from their cards without a fee, said Marshall Alexander, controller for the fast-casual chain. “No employee should incur a fee to access their pay,” he says.

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