New Payroll Card Guides

March 17, 2011

A group calling itself the Electronic Payroll Coalition (EPC) has developed a set of Core Principles for Payroll Cards.

Developed in collaboration with Consumers Union and the National Consumer Law Center, the 10-point document lays out recommendations for all who are engaged in issuing, selecting, using or regulating payroll cards. While the document is comprehensive, a statement announcing the effort noted that collaborating organizations are free to issue "supplemental principles."

Payroll card adoption has been on a steep trajectory for the past several years, as major corporations like Walmart eliminate paychecks in favor of the cards for millions of unbanked and underbanked employees. (See previous posts here and here.)

The EPC, founded last fall, consists of the Association for Financial Professionals, the American Payroll Assocation and NACHA - the Electronic Payments Association. The Core Principles are the work product of a collaboration involving EPC, the consumer group Consumers Union and the National Consumer Law Center.

Here's what they agreed to and define as Joint Core Principles for Payroll Cards.

1. Employees must be able to access their full wages at least onec each pay period, without cost
2. There can be no rules inhibiting an employee's ability to access full wages at least once a month for fee, or to open or close a payroll card account. And employees must be allowed at least one replacement for a lost or stolen card, without charge, once each calendar year.
3. Clear and conspicuous disclosures of terms and conditions of payroll card programs must be explained prior to enrollment.
4. Terms and conditions must be provided in language employer normally uses to communicate employment-related policies to employees.
5. Employees should be able to access account balances for free using an automated telephone system and at least one other electronic access option.
6. Payroll cards will not be linked to abusive forms of credit, credit practices or fee-based overdraft programs.
7. Employers must use a program that maintains payroll funds in an FDIC- or NCUA-insured account on a pass-through basis to individual employees.
8. Funds in a payroll card account shall not expire.
9. If a payroll card has an expiration date, the employee must be provided a free replacement prior to the expiration date.
10. Employers offering payroll cards must also offer Direct Deposit to a checking/savings account at a bank or credit union of the employee's choosing.

You can download a copy of the Core Principles here.

There are nearly four times as many individual bank loans to adults in the developed world as there are in developing countries (0.82 vs. 0.22)

_-CGAP