Walmart: No More Paycheck Here's Your Pre-Paid Debit Card
Walmart, our nation's largest employer, has eliminated paper paychecks. Now employees can choose to sign up for direct deposit or have their wages added to a pre-paid debit card. ABCNews says that only about half of Walmart's employees use direct deposit — the rest either prefer a paper paycheck or, in some cases, don't have a bank account.
From ABCNews:
Wal-Mart employees will be able to use the cards anywhere that accepts MasterCard and also be able to get cash from ATMs.
There would be no fee from Wal-Mart or MasterCard – who is providing the cards – for the first ATM withdrawal in a pay period. (Banks could charge their own fees for using their ATMs.) After that first withdrawal, each additional one would be $2. Employees can also purchase something at Wal-Mart or Sam's club stores and get cash-back above their purchase without any fees. Workers can also get checks to pay people who don't accept debit cards.
The use of company controlled debit cards brings up some interesting privacy issues as well. Debit cards leave a paper trail — do you really want your employer to know how you spend your money? Walmart says they don't have access to that data:
"Wal-Mart's Moore said that would not be the case, saying that the program is "administered by MasterCard and First Data and we won't have the ability to see that information."
The upside for some employees — those without a checking account who were relying on check cashing services — is that it may actually save them money. Either way, it will certainly be cheaper for Walmart. The switch to debit cards will save 257,572 pounds of paper a year.
Wal-Mart to Pay Via Check Cards [WSJ]
Wal-Mart to Staff: Bye-Bye Paycheck, Hello Debit Card [ABCNews]
(Photo:crawfishpie)
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Comments:
I really don't understand this idea. ATMs only dispense in 20s, and only up to a certain amount, which inevitably leaves unused money on the card. They then have to find a place to spend this money. What about rent or mortgage? What about utilities? There are lots of expenses that can't easily be paid with a debit card. This doesn't seem at all user-friendly.
Hold on a second. WalMart has a money center where they can cash checks inside...
WHY CANT THEY JUST PAY THEIR EMPLOYEES FROM THERE?
The only problem I have with this is that Bank fee for using the ATM. I'd love to meet a bank that doesn't charge you a fee for using their ATM. It seems that's probably going to be less than most check cashing places.
The easiest thing to do would be to get a checking account.
The City of Houston did this to employees a couple of years ago.. They basically said, "Get direct deposit, or we'll set up an account for you."
I think it's pretty lousy.. but then on the flip side, I wish mine and my husband's jobs had direct deposit.. It's not an option for us.
How does the song go...
You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
This needs to be made illegal right now.
$2 per withdrawal is a substantial chunk for people making minimum wage.
The workers should be given the option to accept the debit card or get a paper check at the store.
If it's free for the first transaction, but $2, don't they get dinged for that because ATMs are only able to dispense a certain amount, and usually nowhere near the amount to withdraw an entire pay period's worth of money. So I don't know how much money these employees are really saving...
When I worked for GameStop, they worked this way: either direct deposit, or debit card. Those debit cards sucked but I was stuck with getting my first pay that way. Luckily, the first paycheck was only for about four hours' work because I started right before a pay period ended.
I was amazed, when I moved to NYC, to find out just how many people DON'T operate in the checking-account world. It's definitely a socio-economic class thing, but also a "recency of immigration" thing and a "how my parents did it" thing. I assumed that everyone put their pay into their bank accounts and paid their bills from their bank accounts, but there are a lot of folks out there who either cash the check or get the cash from the debit card, then go stand in line at ConEd or Comcast or wherever to fork over the cash for their bills.
How about paying employees with Wal-Mart gift cards? Keepin' it in the family and all....
I have to side with walmart here, its going to save so much paper. In the long run it will be safer for people without bank accounts to carry a card rather than cash, and those check cashing places gouge you with fees. This idea benefits a lot of different sources. Saves money for Walmart (don't really care), saves paper for the environment and ink, and the emissions produced by the machines to print the checks, it saves money for the employee without a bank account (I'm assuming most of those with a bank account user direct deposit), and it makes the employee safer carrying a card rather than cash.
@pecan 3.14159265: Suppose it depends in part on how much they would get charged elsewhere (like a check-cashing place). I seem to recall those kinds of fees can be fairly high.
@cotr: Well, they can. They in fact offer free check cashing to employees (which I happen to be). Now those who receive this card will lose even more money to ATM fees. Like all things with Walmart, it's about the company saving money. Heaven forbid they look out for their employees' interests.
@starrion: I'm confused on what stops these people from getting a checking/savings account and merely setting up direct deposit. Most retail places supply information on where and how to do this.
I have a hard time being outraged over a $2 dollar fee if someone just doesn't feel like having a checking account.
It depends on the person. we have this at my job (don't work at walmart) and it's good for me because I didn't have a bank account since i had no real need for one. And I rarely, if ever, use ATMs.
@Princess Leela: I guess so. From my experience, an ATM will only let you withdraw $500 a day, right? So if you make $1,000 a pay period (I'm just guessing, I have no idea if this is high or low for Wal-mart) I guess the $2 fee isn't bad at all compared to a check cashing place.
My company has been doing this for a couple years now. Luckily I have DD. I never did understand this concept. I don't think I can call my mortgage company and give them a debt card number to pay the bills!
@pr0k:
Maybe they are blacklisted by banks and aren't allowed to open any type of account with them (they owe banks money).
I think people are focusing on the debit card; the workers aren't obligated to accept that if they have a checking account to deposit their money into. I know several people who don't want the "hassle" of going to a bank, opening a checking account, balancing a checkbook, etc. I think it's perfectly fine they pay for the convenience of not having that "hassle" via ATM fees, etc.
@JGKojak:
Well, I was born one mornin' when the sun didn't shine.
I picked up a till, I walked out to the line.
I rang up sixteen tons of Wal-Mart coal,
An' the store boss said: "Seventeen was the goal"
www.ingdirect.com
From the employee's perspective, I guess it's better than taking a check to a check-cashing place (or cambio de cheques as all the signs in my neighborhood say). But it's still far from the ideal situation, which would be one in which you can use the money you earn in any way you please.
Also, don't some banks charge for direct deposit on some accounts? Or is that all gone now?
Anyway, when it comes down to, as I think Consumerist has said before, the card companies and the employers love these deals. They enter into a multi-year contract, and sometimes the employer doesn't even have to pay the card company anything because the card company knows that they'll make a fortune off the fees. So the employer doesn't have to pay for accounting and paper checks (saving money), and the card company makes millions off of fees (earning money). Everyone wins!
@mexifelio: So again, I'm supposed to be outraged over a $2 dollar fee for someone that is unable to use banks, due to their outstanding debts?
I'm confused..
PHEW! Good thing Wal-Mart found a way to save themselves more money, I thought for a minute there they wouldn't find a way to make a trillion dollars this year.
@gafpromise: The article mentioned that employees can get checks to pay merchants that don't take debit cards (i.e., rent). I'm definitely not defending this practice, nor am I clear on how this checks-with-no-checking-account thing is supposed to work, but the mention is there.
I have an idea. Let's not worry about paying people. I mean, that takes a LOT of paper, and time, and administrative staff. Let's just pass a law mandating that everyone has to work at Wal Mart a couple shifts a month. That way, Wal Mart can make a profit, and, when the Walton family buys a Yacht or a vacation home, a few people will have jobs for a couple weeks. Then they can go right back to work for Wal Mart.
How do they pay their utilities? All their income is on a debit card. Let's say there are a few employees without internet access or even a computer. Are they supposed to go to the local library, input sensitive data to pay their mortgage online?
Calling over the phone to pay that way charges a fee. Using the debit card to buy money orders is charging more fees. I can't see how this does anything but incur fees for the employee, even if reducing fees for walmart.
Back in the early 80s when I worked at K-Mart we were paid in cash. The idea was to get us to buy stuff on the way out.
@mexifelio: Show me an example of where this has ever happened to anyone. Oh, that's right, banks don't operate "blacklists" of people that aren't allowed to open a checking account. They may not open a line of credit for a customer that has bad credit, but anyone can open a checking account as long as you have proper ID.
@starrion: $2 is way less money than what a third party check cashing service is going to charge. Also, an employee can get a 35 cent pack of gum at the store where they work and withdraw money without a fee. This shouldn't be made illegal. It's saving tons of paper and postage, so it makes perfect sense for the corporation and doesn't hurt employees.
@pr0k: Any number of reasons. Maybe they're immigrants (legal or illegal). Maybe their parents taught them not to trust banks. Maybe after this financial shithole we're in, they just plain don't trust banks. Maybe they don't have easy access to banks, but have easy access to check cashing places instead (for an example, I would invite you to my neighborhood).
Point is, there are a lot of reasons why people don't use banks, and they should be free to make that choice.
@Princess Leela: And why in the hell would I want to go to my employer to get a check written out to my mortgage company?
Work for the company, get paid in company script, shop at the company store. you're done.
Almost like the Coal Towns. I have some Company coins my grandfather gave me that his father used to earn...crazy stuff.
Anyways, what's the fuss? If someone just changes the check into cash all at once, they can do the same thing with the card. How many WM employee's DONT shop at WM? do the cash back and no fees no worries.
@Papercutninja: No.. we both work for small businesses with a small number of employees. At my job it's just me and my boss.. so it's just easier to give out paper checks.
I work at a small credit union by the way.. I don't think we're in the Mob business.. lol.
@gafpromise: It's user friendly to get a damned checking account and set up direct deposit. It makes no sense to me when people don't do this...
@dorastandpipe: Good point. The privacy issue is definitely ... an issue. That said, anybody with a mortgage pretty certainly has a bank account, which would make this a moot point.
Leave it to Wal-Mart to find a way to steal from their employees while paying them.
@pecan 3.14159265 needs curry and naan:
Lol that would be really really high for most employees at walmart unless they get paid once a month.
If you read the official press release it says employees will have the option of cashing out the card at a register in the store.
@pecan 3.14159265: Erm, assuming a very optimistic $8/hr, 40 hours a week, and bi-weekly paychecks (reality is almost certainly much lower), gross pay is all of $640. After FICA, you're already at $582, which is below the $600 limit on Chase and BoA ATM's.
Even at $300 limits, you're talking $2 in fees in-store, which is still better than cash-checking fees.
@sqlrob: there's a risk in any type, it's probably more common for the cash to fall out of your pocket as you go to get your keys out than getting skimmed.
@EdnaLegume: How do they pay their utilities if they don't have a checking account? Same issue, regardless of whether Wal-Mart issues them a paper check or a debit card.
This is how my employer pays us... When you have over 70,000 employees (such as my employer) probably saves a penny or two to do this.