05.11.15 |
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What is the Difference Between General Purpose Reloadable Cards and Pay Cards?

DifferenceIn 2013, the Federal Reserve System issued a study1 confirming a trend that many of us have been noticing for years – payments are increasingly being processed electronically. For example, in 2012, the number of credit card transactions grew to 26.2 billion compared to 21 billion in 2009. At the same time, the number of paper checks entering the banking system has dropped, according to the same study2.

Converting to electronic payments has changed the way financial institutions run their businesses and has provided consumers with more options for how they want to handle their cash. As a part of this trend, a variety of cards, like the general purpose reloadable card (GPR) and pay card, have emerged as popular methods for cash management. But how can customers tell the difference between these two types of cards and decide what works best for them?   Here are some of the key differences:

GPR cards carry insignia from a major payment card company (e.g., American Express or Discover) and can be used to make purchases or for ATM transactions. GPR cards are most often purchased by customers from retail locations. Customers have to load funds onto their cards in advance, which can either be done electronically or at a retail location within a reload network3. There is little governance of these cards, and most companies charge the cardholder fees to make purchases through PIN debit or signature methods4.

  • Pay cards also carry insignia from a major payment card company and can be used to make purchases or for ATM transactions. However, unlike GPR cards, pay cards are typically distributed by employers and can be selected by employees as one way to receive their pay. With this option, an employee’s net wages are loaded onto the card and can be used to make payments as well as withdraw cash. For busy workers on the go, pay cards can serve as a convenient alternative to cashing paper checks and can help workers quickly access their funds to pay off expenses. Unlike GPR cards, paycards are subject to strict federal and state governance. As a result, many pay cards have features that allow cardholders to access their funds at least once per pay period at no charge. In addition, most pay cards don’t charge a monthly maintenance fee, overdraft fee or any other charges that could be deemed to reduce an employee’s net pay. There are also federal laws governing dispute resolution for unauthorized charges to pay cards.

While convenience is key, it’s up to individuals to understand how to make secure payments and protect their account information regardless of what type of card they use. Following basic fraud protection practices, including the practices outlined by the Federal Trade Commission, can help set people on the right track5.

For employers offering pay cards, it’s essential to understand the rules and regulations associated with these cards as they may differ from state to state. Companies that are not compliant with these rules and regulations can face financial and legal repercussions. However, these rules and regulations are what generally offer consumers using pay cards more protection than consumers using GPR cards. For example, there are laws that limit the fees that cardholders may be charged in connection with pay cards that do not apply to GPR cards.

Click here to learn more about electronic wage payment solutions from ADP.




1The 2013 Federal Reserve Payments Study – Recent and Long-Term Payment Trends in the United States: 2003-2012

2 The 2013 Federal Reserve Payments Study – Recent and Long-Term Payment Trends in the United States: 2003-2012

3The Federal Reserve Bank of Kansas City – General Purpose Reloadable Prepaid Cards: Penetration, Use, Fees, and Fraud Risks

4AARP—Prepaid Cards: Promise and Pitfalls for Consumers

5The Federal Trade Commission – Protecting Against Credit Card Fraud


The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.



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