Taco Bell, Walgreens and Walmart are among the dozens of well-known companies that now use the prepaid cards for their workers. In some cases, employees no longer have the option of being paid by check or direct deposit.
But using the cards usually means paying a fee, such as 50 cents for a balance inquiry, $1.75 for each cash withdrawal, or $2.25 for using an out-of-network A.T.M, or $2.95 for a paper statement, or $7 for not using the cards over a period of time.
The fees can really add up, and represent a big subtraction for an employee making only minimum wage.
The trend of switching to prepaid cards has attracted the attention of New York Attorney General Eric Schneiderman, who is looking into at least 20 employers, including McDonald’s, Walgreens and Walmart.
The biggest issuer of payroll cards is Texas-based NetSpend. JPMorgan Chase, Bank of America, Wells Fargo and Citigroup also profit from the payroll card system, which they argue provides a service for low-income workers who don’t have a bank account. In 2012 there were more than four million Americans using payroll cards.