But the Milwaukee Journal Sentinel reports that these workers stand to benefit from a new product called payroll cards. They function similarly to debit cards and give workers who don't have bank accounts access to their wages via automated teller machines.
The newspaper reports that the Metavante Corp., a subsidiary of the Milwaukee-based Marshall & Ilsley Corp., is marketing the cards to its bank clients, who in turn will try to sell them to businesses as a way to reduce payroll costs as well as help workers.
Metavante announced it recently signed its first deal to provide and process the payroll cards - a four-year pact with West Suburban Bank in Lombard, Ill.
Frank D'Angelo, a Metavante senior vice president who oversees the program, told the Journal Sentinel that he expects the cards to catch on as companies try to reduce their reliance on payroll checks and offer employees a convenient option.
A large number of people who receive paychecks don't have accounts at banks, thrifts, or credit unions, D'Angelo said. "The number is between 20 million and 25 million people who really don't have a bank account," he said, adding that his product "provides them a good solution. People have access to their money, and they keep their money in a secure place."
The payroll card works the way debit/ATM cards do. Wages are deposited into a bank account in a worker's name each pay period. Then, instead of taking the entire amount in cash as he or she would at a check-cashing store, the employee can withdraw only as much as desired from an ATM.
The payroll card also functions as a debit card, enabling workers to purchase groceries, gasoline, clothing or other retail items at stores that accept debit cards from Visa or MasterCard.
The user can keep track of the card balance through a personal register and a monthly statement. Balances also can be checked at ATMs for some cards.
Spending with payroll cards is limited to the amount in the account.
The target employers for the product include those with high turnover, such as fast-food restaurants, and industries that use immigrant employees who may not be familiar with banks or have a mistrust of them.
Kathryn Crumpton, counseling supervisor for the non-profit Consumer Credit Counseling Service in Milwaukee, said the payroll cards might help some people track their spending and plan for expenses.
"It gives a person some protection, some safety rather than carrying around cash," Crumpton said.
For employers, the Journal Sentinel observed, the cards may reduce the costs of producing, handling and distributing payroll checks. Visa says that 4 million paychecks are lost or stolen each year, and that reissuing them costs U.S. businesses $48 million a year.
one estimate, up to 25 million people lack bank accounts. As a result, they must carry their wages with them, in cash. Besides being dangerous and inconvenient, it often requires using expensive check-cashing services.