Comment Re:How is this legal? (Score 1) 1103
Sorry, what?
This is greed, plain and simple. Companies that partner with issuing banks of prepaid cards (whether used as payroll, gifts/bonuses, payment cards for the underbanked paid for in cash, etc) get a cut of the fees paid by the cardholder and merchants where the cards are used (interchange).
I expect it also allows employers to more easily employ people who have a questionably legal worker status, as those workers are likely to accept the prepaid card since getting a proper bank account to cash paychecks may be difficult (I suspect that the Know Your Customer diligence required of the issuing banks of these cards is dubious; opening a proper bank account may screen illegals more effectively). It doesn't help that banking laws requiring performing KYC, but do not at all define what that minimally entails. Because there are no lines of credit being issued, the risk to the bank is effectively zero so long as they successfully screen out people on the terror watch lists.
Poor regulation of the payment card sector is what allows this to continue. Stuff like the Durbin Amendment helped slightly as it capped interchange on debit cards, but of course did nothing to address the "convenience" fees thrown in the mix. A lot of the costs of processing payment cards (i.e., as the merchant), when you dive in, are reasonably justified, but that's not a discussion I can have in a textarea field; however, charges such as cash withdrawal or balance inquiry fees are simply abusive and need to be legally addressed.
Source: I work in the payment card industry, and have in the past integrated with issuing banks to issue debit cards. Not for this sleazy payroll shit though.