“As employees begin to feel the high costs of a largely unregulated sector of the banking market, large corporations and banks increase profits unscrupulously”

More employers are paying employee wages via prepaid payroll debit cards. As employees begin to feel the high costs of a largely unregulated sector of the banking market, large corporations and banks increase profits unscrupulously.

Some employers—usually large retail and restaurant chains—have replaced traditional checks with prepaid debit cards to pay their hourly employees. Employees can use these cards like any other debit card to make purchases, pay bills, transfer funds, and withdraw cash at an ATM.

However, prepaid debit cards charge high fees for balance inquiries, ATM withdrawals, over the counter withdrawals, automatic bill pay, purchases, balance inquiries, and transfers to a checking account. The fees can be so high that some employees actually end up making less than the minimum wage.

The practice of a number of companies making payroll debit cards the only payment option for certain employees has recently come under fire.

According to the Site Group research firm, $3.4 billion was put on to 4.6 million active payroll cards in 2012. Figures are expected to reach $68.9 billion in 10.8 million cards by 2017.

Companies like McDonald’s, Taco Bell, Walgreens, Victoria’s Secret, The Limited, and Wal-Mart use these cards to pay their hourly employees. Prepaid cards are issued by most major banks and credit card companies, including Chase, Bank of America, Wells Fargo, and Citigroup, as well as several other less-known issuers. 

The law in 25 states allows employers to pay wages through direct deposit or prepaid cards instead of traditional checks. Laws in other states are less clear.  A handful of states require payment in cash or check. 

Banks and card issuers claim that they can save companies a substantial amount over using conventional checks. For example, the Visa payroll card savings calculator estimates $1,980 in annual savings for a company with 100 employees and $39,600 for a company with 2,000 employees.

Read more: http://communities.washingtontimes.com/neighborhood/world-our-backyard/2013/aug/12/payroll-debit-cards-hitting-vulnerable-employees-w/#ixzz2btRMyqIw
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Note this story is not from some left leaning operation which hates large corporations and profit, it is the Washington Times