My Employer Will Only Pay Me By Prepaid Debit Card. Is That OK?

Everyone (except consumer advocates like us) seems to love prepaid debit cards. You can get student loan fundage on them, unemployment benefits, and even federal and state tax refunds. And now they’re handling your paycheck. Christopher just took a job as a pizza delivery driver for a major chain, and he has only one option for receiving his pay (other than tips): a prepaid debit card. He doesn’t like it.

I just started my first day on the job as a delivery driver for a major food delivery chain. They told me today I had to fill out a form to receive my hourly wages on a prepaid debit card through a financial institution I’ve never heard of.

Ever since I was in high school, I’ve used the same bank for everything (the best bank in the world) for absolutely everything. To this day I remember thinking, “Which bank do I want to trust with my money and my personal information?” And I’m still with that bank today, and avoid doing business with any others unless I have no alternative.

Only a small portion of my overall income from this job will be issued on the debit card, most will be made in tips. The store is telling me there are no fees associated with using the debit card. That strikes me as a little hard to believe, but even if that’s true, I’m still being put in a situation where I have to entrust a financial institution with my personal information. And I’m adding an extra unnecessary step.

A quick google brought me to a web forum where a parent was complaining how her 16 year old son (also a delivery driver) went to withdraw $100 from a prepaid debit card after being paid on it, never received the money, yet his account showed the funds had been withdrawn.

I asked the manager if they could do direct deposit, however the answer from the payroll department is that the prepaid debit card is the only option.

This sounds unethical to me. Is it legal? Is there anything I can do if I don’t want to sign up with this other bank, short of refusing the job offer? I feel like it’s perfectly reasonable of me to want to decide who has access to my personal information, an employer is one of those, but a bank is something I should have final say in. Or am I overreacting?

Our fellow watchdogs down the hall at Consumers Union worked with the National Consumer Law Center and industry group the Electronic Payroll Coalition to draw up some core principles for paying employees by card. First on their list: employees should be given a choice, and still have the option to use direct deposit or a check. Even if payroll is 100% electronic, they should offer an option for regular banks.

For Christopher, the solution is obvious: if there are really are no fees, visit an ATM every payday, round down to the nearest $20, take out his cash, and deposit it in his beloved bank.

Prepaid Debit Cards Are Money Sucking Black Holes In Your Pocket