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February 26, 2003
Employers Pay Wages Through Debit-Like Cards
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n payday comes, employees without bank accounts don’t benefit from direct deposit and in order to cash their checks they typically have to go to check-cashing services, which often charge a commission for each check.

Increasingly, though, firms offer those employees payroll cards, similar to debit cards, to which the company will transfer employees’ wages, the New York Times reports. Workers can use the cards to withdraw the money from automated teller machines. An estimated 25 million employees don’t have bank accounts, according to the Times.

The newspaper reports that Coca-Cola is expected to announce a new initiative that will market the payroll cards to restaurants, hotels and entertainment sites. The beverage provider says paperless payrolls will save companies money and will be a convenience for workers, according to the Times.

Under Coca-Cola’s plan, Citibank EFS will issue the payroll cards, which will hold the MasterCard logo, meaning the cards will be accepted wherever that credit brand is. Employers don’t pay the beverage firm --Coca-Cola will receive a portion of the fees merchants who accept credit cards pay to Citibank and MasterCard, according to the Times.

The newspaper notes that the list of employers offering payroll cards includes McDonald’s, FedEx and Sears, Roebuck. Payroll cards have increased in popularity since Visa and MasterCard entered the field in 2001, the Times reports.

Ariana-Michelle Moore, a research analyst with Celent Communications in Boston, tells the Times that only about 6 percent of workers without bank accounts use the cards.


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