Solving your payroll and HR issues with insights, answers, and action.

  • Startup
  • Payroll/Taxes
  • Human Resources
  • Employee Benefits
  • Business Insurance
  • Compliance
  • Marketing
  • Funding
  • Accounting
  • Management
  • Finance
  • Payment Processing
  • Taxes
  • Overtime
  • Outsourcing
  • Time & Attendance
  • Analytics
  • PEO
  • Outsourcing
  • HCM
  • Hiring
  • Onboarding
  • Recruiting
  • Retirement
  • Group Health
  • Individual Insurance
  • Health Care
  • Employment Law
  • Tax Reform

Benefits of Direct Deposit to Employers and Employees


With 82 percent of working employees in the United States being paid by direct deposit, it deserves closer examination to determine if the process is right for your company, particularly if you're considering payroll services. Initial setup requires the employee to submit a void check with their banking account information. Prior to the money being transferred, employers can review payroll reports and confirm that the amounts being processed are correct.

There are many benefits to offering direct deposit, such as:

Cost Savings

The time spent on preparing payroll is greatly reduced. Writing, signing, and folding the checks, stuffing them into envelopes, and delivering the checks can be very labor intensive. These paper costs are reduced as checks and envelopes are no longer required.

Direct deposit also saves money by:

  • Reducing costs associated with re-issuing checks due to lost or stolen checks, stop payment charges that may be levied by a bank, and investigating when a check has gone missing.
  • Realizing savings in absenteeism, since employees no longer need to take extended breaks to deposit or cash their checks.
  • Allowing human resources and payroll staff to avoid having to stay in the office to manually prepare checks. They can be remotely processed.

Employee Convenience

There are multiple ways to pay employees, but direct deposit is the method with the greatest benefits to employees and employers. Employees no longer have to wait in line to deposit or cash their checks.

Also, an employee doesn't have to be in the office to get paid. If they are on vacation or on a sick day, they can be assured the deposit will be made. 

Having control over where the paycheck goes is another way direct deposit provides flexibility and convenience for employees. They can direct funds to go to a retirement savings plan or a checking or savings account or even split between multiple accounts. Bills can be paid immediately online as soon as the deposit is made.

Other Benefits

Having a paperless payroll system is environmentally friendly because it reduces a company's carbon footprint. The green impact can be further expanded by offering online pay statements that can be available 24/7. According to NACHA, paper checks use more than 674 gallons of fuel a year.

In addition, lost or stolen checks are a common source for identify theft, but with electronic deposits, an employee's personal information is viewed by less people.

Finally, with savings per check ranging from $2.87 to $3.15, the implications could be great for a company that may employ hundreds of people. Once the accounts are set up, the benefits will be realized immediately. Direct Deposit provides peace of mind for employees and employers alike, so be sure to explore the options that are available.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
View More in PayrollView All Categories