Paycards (also referred to as "payroll cards"), 
a form of prepaid card, are subject to significant regulation. On the state level, most wage payment statutes require that employees receive their full wages each pay period without discount. In the paycard context, this often is interpreted to mean that employees must be able to access all of their wages at least once each pay period without fees. In addition, the wage payment statues and regulations in many states expressly regulate the use of paycards, addressing such issues as disclosures, other payment options, and access to full wages and account balance information.
On the federal level, a regulation enforced by the Consumer Financial Protection Bureau (CFPB) known as Regulation E prohibits making paycards the only payment option available to employees. Regulation E also requires disclosure of any fees that may be incurred as a result of the employee's use of a paycard. Just like employees who decide to use a check-cashing service to cash their paycheck, or employees with direct deposit who decide to access wages from an out of network ATM, employees with paycards may incur fees if they fail to take advantage of the many access methods that are offered free of charge. Due to the disclosure requirements of Regulation E and similar state laws, these fees should never come as a surprise to employees.
Regulation E includes a number of other consumer protections as well, including limiting cardholder losses when paycards are lost or stolen. Employees with branded cards (i.e., those with a Visa, Mastercard or Discover logo) also are protected against most fraudulent uses by the brand's zero cardholder liability policy. Finally, the Federal Deposit Insurance Corporation (FDIC) has issued an opinion making clear the funds in paycard accounts are considered insurable deposits if they are placed in an insured depository institution.
Paycards offer protections to many workers who, without bank accounts, often incur high fees when cashing their paychecks and then incur additional costs when paying bills using money orders or traveling to a payment location to pay in cash. Paycards provide these workers with the ability to access their wages in a much cheaper, safer and more convenient manner than when paper paychecks are used.