Employers can issue payroll debit cards
LANSING – Legislation sponsored by Sen. Darwin Booher to enable more employers and consumers to take advantage of payroll debit cards was signed on Thursday by Gov. Rick Snyder.
“Many employers and employees prefer the option of making or receiving wage payments through a payroll debit card instead of by cash, check or direct deposit,” Booher, R-Evart, said in a statement. “This reform is a simple fix that is about making it easier and more available for companies and workers to use this type of service in Michigan”
Senate Bill 1281, now Public Act 440 of 2012, alters the definition of payroll debit cards to include cards issued by a third party on behalf of a bank or credit union. The law is one of 15 bills signed to adopt recommendations from the Office of Regulatory Reinvention.
A payroll debit card, also known as a paycard, is a prepaid card that an employer can “load” with payment funds as necessary. Employees then can use their cards to obtain cash at an automatic teller machine, make debit purchases from merchants or make purchases and receive cash back.
Previously, Michigan law required payroll debit cards to be issued by a financial institution.
“Most community banks and credit unions do not issue their own cards because of the prohibitive costs,” Booher said. “Since these institutions use third party vendors to issue cards on their behalf, without this reform they would not have been allowed to offer paycards. By making this change, we are allowing employers, consumers and financial institutions to experience the benefits of payroll options – including using paycards.”