Corporations have created another ridiculous system, which pretends to offer the benefits of banking to poor and working class people. Touted as an alternative to the high fees of check cashing stores and payday advances, payroll cards really increase the bottom line for corporate interests, allow the government to spy on us and further the abstractions of economy.
The advent of payroll cards further plasticizes the economy, mimicking the transition of government aid like food stamps, from checks to debit cards. Rather than offering workers more protection and flexibility, the system reinforces poverty through encouragement of spending and an increase in liability for theft and fraud.
How They Work (Or Don’t)
Payroll cards were created in the late 1990s as way for corporations to reduce their payroll costs (labor and printing). Payroll managers–banks, credit card companies or independents–contract with corporations to manage low wage payrolls. Employees are issued plastic cards, like debit cards, into which the managers deposit wages. The cards can be used like ATM cards or for purchases. McDonald’s, Sears, Fedex, and Cingular have already implemented new payroll systems.
The employees likely to use payroll cards are part-timers, low-wage workers or anyone without a bank account. Since direct deposit is cheaper for businesses, payroll cards become a sort of poor person’s direct deposit. However, payroll accounts lack the security of both bank accounts and cash under the mattress.
Traditional bank accounts are protected federally by Regulation E, which affords account holders no liability for theft or fraud on their account. Funds must be restored and the banking institution absorbs the costs. Similar liability coverage exists for users of major credit cards, although they are not obliged to offer complete protection. Payroll cards are neither bank accounts nor credit lines, and so they are not specifically protected by any federal regulation. You might say that one relies on the goodness of the issuer to protect the user. Not always so reliable… I came across this issue while reading a state bar journal, and the conclusion was basically that there is no legal precedent to protect users of payroll accounts.
However, beyond this basic drawback, payroll cards are generally more expensive for employees than establishing a regular bank account. While it’s true that check cashers can take up to 25% of a payday advance, many banks now offer accounts with no minimum balance and less than $100 a year in fees. Credits unions usually offer even better deals. Payroll companies can charge fees monthly, for withdrawals, for transactions, and per deposit. Wouldn’t it make more sense to give people bank accounts than rob them with fees, if they must work and bank to live in the present?
Why We Should Be Concerned
The claims that private payroll services and Visa/Mastercard make about the convenience of the cards doesn’t really hold up. If people are interested in saving, then knowing how much cash you have is more helpful than the abstraction of plastic. Practically, how do you pay rent with these things? And, how would they help any of us escape the absurdity of money and commodity and exchange rates. Until we start thinking outside of transaction, we can never truly escape the capitalist paradigm. Self-sufficiency, community resources and a certain amount of luddism would help more than fake bank accounts.
If you must participate, cash is safest. Unless you are shopping online (whatever retail therapy that is…) cash is easier and less time consuming than credit. Cash is usually invisible when we need it to be–leaving no record of your whereabouts or buying habits. The more we use trackable methods of payment, transportation and communication, the closer we come to shackling ourselves with GPS tracking devices. It seems as though convenience is too often tied to surveillance.
Ultimately, payroll cards don’t address the issues of sustenance that poverty presents; they just give a nice, bourgie feel to spending. “Look, we all shop with plastic now.” The motivation for reaching the “unbanked”, as payroll card users are patronizingly called in finace, isn’t to create security, but to profit by inventing need. Some folks who don’t have bank accounts are receiving federal assistance & would lose their aid if they had any bank balance. (I know someone whose disability was cut off because he made “too much money” working part-time at minimum wage.) Instead of offering any kind of stability, which payroll companies present to employers, the system ultimately undermines well-being by creating dependence on ATMs, reducing people’s access to their resources, and encouraging a mentality of corporate paternity. (Some companies offer discounts when purchases are made with the card through their programs.)
Beyond the immediate concerns of hand to mouth life (not that they are trivial), the growth of plastic economy demonstrates our distance from the fundamentals of life. Food comes from grocery stores (or dumpsters), heat from vents, and money, however alienating, comes from automatic tellers. Sometimes death even comes from un-manned machine guns. It’s all part of the video-game anaesthesia that corporate anti-culture sells to us. Do work which is unfulfilling so you can buy things to fulfill you. For this you need credit. Therefore banks, and jobs and economies and exploitation. Payroll cards just bring more people into the fold; more capital to be recycled into offshore bank accounts while most of us live off a ridiculous wage. The absurdity of our economy becomes clear when conveniences cripple us. Payroll cards are just another one of those conveniences.