More Las Vegas companies are paying their workers with plastic
It’s payday: Will that be paper or plastic?
More companies in Las Vegas are offering their employees the option of being paid with plastic instead of traditional direct deposit or paper checks. Those payroll debit cards are automatically loaded with money each pay period.
Employees of Starbucks, Wendy’s and Chipotle can opt for payroll debit cards. The cards also are available to workers at Darden restaurants and MGM Resorts International.
“There are three ways our employees can be paid,” said Rich Jeffers, a spokesman for Orlando, Fla.-based Darden. “They can receive a paper check, deposit to a payroll card or direct deposit.”
Jeffers said 48 percent of the company’s 200,000 employees use payroll cards, while 50 percent have direct deposit with their bank and 2 percent receive a paper check. Darden, which operates Yard House, Red Lobster, Olive Garden and The Capital Grille, employs some 1,300 workers at 13 restaurants in Las Vegas.
“Yes, there’s a cost savings for the company,” Jeffers said. “But not everyone has a bank account. There are a lot of unbanked people in the U.S. There are also folks that choose to access their money differently.”
In 2012, employers loaded more than $34.1 billion in wages onto 4.6 million payroll cards, and that number is expected to grow to 7.1 million cards and $51.5 billion next year, according to Aite Group, a business-research firm.
Jeffers said the use of payroll debit cards at Darden was “generational.”
“A majority of our employees are millennials,” Jeffers said. The Millennial Generation, also known as Generation Y, have birth dates from the early 1980s to the early 2000s.
MGM Resorts began offering payroll debit cards in 2005. Today, 5 percent of the company’s 62,000 employees use them, while 89 percent use direct deposit and 6 percent receive a paper check.
“The typical reason we get for employees choosing payroll cards is they want to supplement their children who are in college,” said Diane Gonzales, vice president of Finance Share Service Center at MGM Resorts. “They want to monitor their spending.”
Gonzales said other employees use the cards to send money home, while others are simply not eligible for bank accounts but want the convenience of direct deposit.
She said payroll cards are simply an option and are not mandatory.
The use of these cards makes sense as businesses move away from paper paychecks.
Jeffers said with paper checks the company had to mail them to each restaurant “safely and securely,” and employees would have to come in every Friday to pick up their paychecks even if it was an off day.
“Now their paycheck hits the card by 6 a.m. on Friday,” Jeffers said. “It frees up our managers, who used to have two hours of administrative payroll work a week.”
The debit cards can make purchases at a point of sale and be used at ATMs to withdraw funds loaded on them. Some payroll debit card companies even offer check writing services.
At the Association of Financial Planner’s Annual Conference on Tuesday, Skylight Financial, Global Cash Card, Comdata, and Brinks shared convention space with Wells Fargo, Barclay’s and other traditional financial institutions. Brinks, better known for its armored trucks, released Brinks Money in January, its own branded Master Card.
The card offers a number of free services, including enrollment and initial pay card, no monthly fee for current employees, over-the-counter cash withdrawals at member banks, and cash back at retailers.
“We make our money through interchange fees,” said Jonathan Ginsberg, an account executive with Brinks Money. “Brinks gets a very small part of each interchange fee from every transaction.” Interchange fees describes a fee paid between banks for the acceptance of card-based transactions.
The Brinks payroll card is also FDIC insured. Ginsberg said the card is a secure alternative for employees who have “difficulty getting a bank account.”
Ginsberg said the Brinks card isn’t available yet in Las Vegas, but will be next year as the company continues moving into the payroll solutions business.
Global Cash Card doesn’t charge the employee or employer. It also generates revenue by receiving a portion of the interchange fees. Global Cash also offers an electronic checkbook and free bill pay.
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.
CONSUMER PROTECTION
Federal law contains provisions specific to payroll cards that provide employees with certain consumer protections, including:
Disclosure of fees: Payroll card holders are entitled to receive disclosures of any fees that they may incur for electronic transfers of funds to or from the card. These disclosures must be clear, in writing, and in a form that consumers may keep.
Access to account history: The card issuer must either provide periodic statements or generally make card holders’ account balances and 60-day account histories available — by phone for the balance, and online, as well as in writing if requested, for the account history. The account history must include information on any fees imposed for fund transfers.
Limited liability for unauthorized use: Payroll card holders’ liability for unauthorized use of their cards is limited, provided the unauthorized use is reported within a certain period of time.
Error resolution rights: If a card holder reports a payroll card account error, the financial institution must respond so long as the report is received within a certain period of time.
For more information, go online to consumerfinance.gov
Source: Consumer Financial Protection Bureau
