Payroll card
A payroll card is an account an employer sets up, directly or indirectly, to receive wages by recurring electronic transfer, accessed with a card.
A payroll card, also called a pay card, lets employees without a bank account be paid electronically. Federal Regulation E treats it as a payroll card account. You generally cannot require employees to accept one. Regulation E bars requiring employees to receive wages at a particular financial institution as a condition of employment. Offer the card as one option beside others, such as direct depositDirect deposit. Direct deposit is the electronic transfer of an employee’s net pay into their bank account on payday, replacing a paper paycheck.Click to open the term or a paper check. State wage payment laws often add their own rules, so confirm current requirements before a rollout.
How does a payroll card differ from direct deposit?
Direct deposit and payroll cards are both electronic payment methods, so your funding account, cutoffs, and pay date work the same way. The differences show up afterward: which fees the card carries, how the employee gets a statement, and who resolves a lost card. The card may be issued by a bank or a program manager. Regulation E sets disclosure and account-access duties for the financial institutions offering payroll card accounts. Know which methods a payroll provider includes and which need extra setup.
| PAYMENT | DIRECT DEPOSIT | PAYROLL CARD |
|---|---|---|
| Net pay goes to | A bank account the employee already owns | An account created for that purpose |
| Employee access | The employee’s own bank account | Card spending or a cash withdrawal |
| Funding, cutoffs, pay date | Same as a payroll card | Same as direct deposit |
- 12 CFR 1005.18, Requirements for financial institutions offering payroll card accounts
- 12 CFR 1005.10, Preauthorized transfers
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.