In 2011, the National Automated Clearing House Association published the results of their research on the uptake of direct deposit. Of the businesses surveyed, almost one thousand indicated that they did not pay with directdeposit. NACHA used those answers to explore why some employers do not take advantage of the benefits of direct deposit.
The following list summarizes those findings. This entry presents those reasons in the order of their frequency – reasons at the top were the most common and those at the end of the list were the ones cited least often.
We have too few employees to justify it: The benefits of scale make all investments more productive. It shouldn’t be surprising that these are the businesses who opt not to make an effort.
No one has ever approached us about using the service. I would imagine that many of these businesses handle payroll on their own. They are used to writing checks. That is the system they have used forever, andit is likely to remain that way for as long as the same person is managing payroll.
It costs too much: Sometimes the facts get in the way of opinions. Direct deposit is virtually costless. Some payroll service providers may charge a fee, but that is not anecessary aspect of the system. Checks do cost money – printing, distribution, and record keeping create additional labor needs. Using paper checks also exposes an employer to fraud.
Our employee tenure doesn’t justify the work necessary to implement it. This problem can be challenging to overcome. We estimate that a business will save two or three dollars eachtime direct deposit delivers a paycheck. Given that, it’s only fair to concede that it takes a few pay cycles before the effort pays for itself. A similar hurdle exists for payments made to 1099 workers.
Many of our workers are unbanked. No surprise here. According to the FDIC, in seven percent of US households,there is no one with a bank account. In certain occupations, the likelihood that workers will not have accounts is much higher.