B2B Payments

The Great Payroll Card Debate

Last week, the movers and shakers of the commercial card sector struck new deals and partnerships for government, fleet, and T&E. Commercial cards were all about helping other businesses bump up the sophistication of their payments technologies – and security measures – through the power of the card.

But it’s an ongoing legal battle in the payroll card space that began catching headlines last week, and the case is sparking an intriguing debate: Are payroll cards considered legal currency in the U.S.? To answer, lawmakers and industry players will have to reconcile the burden of payroll card-associated fees with the ability for such cards to land a paycheck in the hands of underbanked employees.

Getting EMV-Ready

The shift to EMV technology officially began last week in the U.S., and while the U.K. has been inserting cards into POS terminals for some time now (as opposed to swiping), last week also saw U.K. fuel card provider FleetCor finally make its EMV migration. FleetCor unit Allstar Business Solutions announced Tuesday (Sept. 29) that Oberthur Technologies has facilitated Allstar fleet cards’ adoption of EMV technology.

The move, Allstar said, means greater payment security for fleet drivers and managers alike. “Alongside an enhanced service and product offering, improved security is central to all future product developments,” said FleetCor U.K. Fuel Cards Managing Director Peter Bridgen in a statement.

Virtual T&E

Commercial card issuer WEX will be bringing virtual cards to the corporate travel space through a new partnership with Grasp Technologies and its GraspPAY unit, reports announced Tuesday. The tie-up sees GraspPAY issuing a WEX virtual card for corporate travelers’ booking plans online, a move that WEX SVP and General Manager of Virtual Payments Jim Pratt said brings high-tech flexibility into global distribution systems and online travel booking tools, plus reduces the risk of fraud for corporate travel managers.

Government Spending

Yesterday (Monday, Oct. 5), New Zealand announced that for the first time in a quarter century, it has tendered its banking services, with Citi securing the big contract. The deal has Citi’s Corporate Commercial Cards Services, along with Concur’s Expense Management System, offering New Zealand government officials and bodies a bundled cards service, along with Citi’s international, cross-border payments services.

In a statement, Citi’s Head of Treasury and Transaction Services for the bank’s Australian and New Zealand operations, Scott Southall, said Citi was able to secure this contract due to its reputation as “one of very few truly global banks.”

“This provides the government with cross-border expertise, proven public sector capability and economies of scale that enable cost savings,” he added, highlighting the capabilities of modern card products to satisfy the international and regulatory demands of government commercial card users.

The Great Payroll Card Debate

Last week saw the legal challenge against McDonald’s and its policy of paying employees via prepaid card heat up as defendants — owners of several McDonald’s franchise locations across Pennsylvania — asked a judge to reconsider his refusal to dismiss the case.

Last Tuesday, 16 restaurant owners appealed to the Pennsylvania Superior Court to overturn Judge Thomas F. Burke, Jr.’s decision not to toss the case. The judge had also previously denied a motion for summary judgment.

At the heart of the issue are the fees associated with prepaid cards used to compensate employees. Critics argue that workers essentially have to pay to access the funds on their payroll cards through withdrawal or other transaction fees.

[bctt tweet=”At the heart of the issue are the fees associated with prepaid cards used to compensate employees.”]

Interestingly, the case coincides with new data from the American Payroll Association published Friday (Oct. 2), which found that as more employees get paid via electronic paths – including payroll card – employers are heightening their explanation of the fees that come with such payroll methods.

The “Getting Paid In America” research found that 75 percent of employers explain these payroll card fees to employees.

According to reports, at the time Judge Burke, Jr. denied a motion for summary judgment in the McDonald’s case, he had stated that payment cards are not considered “lawful money of the United States” under the Wage Payment and Collection Act.

The lawsuit, now certified with class-action status, could have a significant impact on employers’ use of prepaid cards to compensate employees, a practice proponents say connects underbanked employees without a bank account to a less expensive way to get paid as compared to other methods like paper checks.

“Employees who chose a payroll card do so for a safer, more convenient, and less expensive option than a paper paycheck,” said Visa Senior Director of Global Prepaid Products Jill Goebel in an announcement highlighting the American Payroll Association’s new study. “This year’s results show employers and card providers are helping their employees understand the best ways to use their cards.”

The lawsuit against McDonald’s seems to disagree, so it will be key for the commercial card industry – especially those that issue payroll cards – to keep an eye on the case as it progresses.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.