A growing number of businesses are getting rid of paychecks and forcing their workers to use pay cards.
The bad thing about pay cards is that they require people to pay a fee before they can access their money. The fees employees are forced to pay can take a big chunk out of their paychecks. In fact, pay card fees can cause some employees to make less than minimum wage.
Many companies have switched to pay cards because they claim they are cheaper and more efficient than checks. A company with 500 employees can save $21,000 every year by using pay cards.
NetSpend is the largest issuer of these pay cards and the company’s president Chuck Harris said they offer convenience to employees and cost savings to employers.
“We built a product that an employer can fairly represent to their employees as having real benefits to them,” he said.
Some card issuers and employers believe that pay cards are beneficial for low-income people who don’t have bank accounts.
“An unbanked employee is likely to be subject to a check-cashing fee when they try to cash a payroll check,” Nina Das, a spokeswoman for Citigroup, said. “Someone cashing a payroll check for $500 would end up paying $15 at a 3 percent check-cashing fee.”
A lot of of employees, however, are still upset about having to use pay cards. Bintou Kamara, a Victoria’s secret employee, said that she had to pay $1.50 just to transfer money from her pay card to her bank account.
“I just make such little money that it seems like a lot to pay just to get access to it,” she said.
A McDonald’s employee was so upset about having to use a pay card that she filed a lawsuit against the company.
Natalie Gunshannon worked at the franchise for less than a month and said she couldn’t afford the fees to access her money.
“I can’t afford to lose even a few dollars per paycheck. I just think people should be paid fairly and not have to pay fees to get their wages,” she said.
Do you think employees should have to use pay cards to access their money?
[Image via Shuttershock]