NACHA Study Reveals Less than 75% of Employees Paid via Direct Deposit

Less than three-quarters of employees receive their paycheques via direct deposit, according to a study from NACHA, the electronic payments association, and PayItGreen. The national PayItGreen Survey 2010 unveiled that 27% of employees still receive paper paycheques, and the primary factor for doing so is that the employer does not offer direct deposit.

“It’s surprising that while other developed countries are nearing 100% direct deposit enrolment, this survey showed that more than a quarter of US employees are still receiving paper cheques – in many cases because their employer doesn’t offer direct deposit,” said Janet Estep, president and chief executive officer (CEO) of NACHA. “Direct deposit is the simple, safe, smart, and green solution for employers, and we hope businesses, small and large, become more aware of the benefits of direct deposit.”

Direct deposit provides employers with significant time and cost savings. Companies can save anywhere from US$2.87 to US$3.15 per payment by using direct deposit instead of paper cheques. In addition, employees spend between 8.5 and 24 hours per year going to the bank or credit union to cash or deposit their paycheques, an activity which accounts for an estimated US$3-5bn loss in productivity annually.

Even with the savings afforded by direct deposit, there is not widespread adoption within the small business community, according to the new report. While direct deposit can save a business with less than 100 employees US$19,000 per year, the survey findings show the smaller the company’s size, the less likely it is for employees to use direct deposit, specifically:

  • Only 375 of those using direct deposit are from small businesses or individual employers, while 63% are from midsize-to-large organisations.
  • Looking at companies with fewer than 100 employees, 48% receive their paycheque via direct deposit. Companies with 30 employees or fewer report an even smaller fraction (35%).
  • Of those who said that their employer doesn’t offer direct deposit, 79% are from organisations with fewer than 100 employees.

In addition to savings, direct deposit decreases an employer’s carbon footprint. If a business that employs 300 people and issues paycheques every two weeks switched to direct deposit, in one year, it would save 121 pounds of paper, avoid the release of 1,159 gallons of wastewater into the environment, save 45 gallons of gas, and avoid the release of 346 pounds of greenhouse gases into the atmosphere.

The PayItGreen 2010 Survey also revealed that these ‘green’ benefits of direct deposit resonate with employees. Fifty-five percent of those using direct deposit find it very or extremely motivating that direct deposit has a positive impact on the environment.


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