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Payroll

Should You Use Payroll Cards in Your Small Business?

Payroll cards are prepaid debit cards you can use to pay your employees. Instead of issuing a cheque, you simply load your employee’s pay onto a payroll card. The employee can then use the card for ATM withdrawals or to make purchases at shops that accept credit cards. There are pros and cons to payroll cards, but in some situations, they can be an extremely effective tool.

Target Market

Payroll cards tend to be the most useful for people without bank accounts. Often referred to as the “unbanked,” this sector of the Canadian population is growing annually, and unbanked individuals are particularly common in industries such as agriculture, food processing, manufacturing, and service industries.


If you give a paycheque to an employee who doesn’t have a bank account, he or she has to find a pawn shop or cheque-cashing service to cash the cheque, and this can get expensive. For example, as of 2016, Cash Canada charges 3.5% of the cheque’s face value to cash it. If someone has a $1,000 paycheque, the fee to cash it is $35. Once the cheque is cashed, the employee faces all the risks and inconveniences associated with cash. Namely, cash cannot be replaced if lost or stolen, and it is impossible to use online.

Benefits of Payroll Cards

Payroll cards offer many of the same benefits as bank accounts or credit cards. If the card is lost or stolen, cardholders can cancel it and safeguard themselves from loss. Payroll card users don’t have to come into work to pick up their cheque. Instead, the money is loaded onto the card remotely by their employer. Additionally, they don’t have to worry about standing in line at a cheque-cashing service or incurring cheque-cashing fees. These cards typically feature a VISA or MasterCard logo and are accepted anywhere that takes these cards.

Drawbacks of Payroll Cards

Payroll card users typically incur fees for ATM withdrawals, bill pay services, bank transfers, and related services, and these fees can be more than bank fees in some cases. Additionally, some payroll cards don’t offer liability protection. As a result, users can cancel the card if it is lost or stolen and get a new card with their existing balance on it, but they cannot reverse fraudulent transactions. To avoid this pitfall, opt to use a service such as Cana Cash, which provides payroll cards with zero liability.

The Final Word

Ultimately, as indicated above, payroll cards offer key advantages for some employees. However, for employees with existing bank accounts, these cards are likely to be inconvenient and unnecessary. If you, as an employer, decide you want to use payroll cards, consider giving your employees a choice. For example, just as many employers allow their employees to decide between direct deposit and paper cheques, you could allow your employees to choose between direct deposit, paper cheques, or payroll cards. This gives your employees the flexibility they need for their finances.

References & Resources

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