Many Small Businesses Still Use Paper Checks for Pay

It costs a business up to $2 to cut and process a hard-copy check vs. 35 cents or less for direct deposits

By SHRM Online staff August 26, 2011

A survey of U.S. small business owners reveals that 48 percent do not use direct deposit for payroll, forgoing several thousands of dollars in annual payroll savings, increased employee satisfaction and reduced environmental impact in comparison with issuing paper checks.

NACHA, a trade association of electronic payment vendors, surveyed U.S. companies with less than $20 million in annual revenue that use a business checking account most often for the company business. The online survey, completed by 2,249 small business financial decision-makers in early 2011, revealed that the top industries that do not use direct deposit into employee accounts for payroll purposes were:

Repair and maintenance services (plumbing, pest control).

Food services (deli, fast food, restaurants).

Personal care services (hair, nail, spa).

Retail (all types).


Wholesale trade.

Arts and entertainment.

Real estate sales and rental/leasing.

Agriculture, fishing and mining.


The survey additionally revealed that:

Of the 52 percent of organizations that use direct deposit for payroll, only 30 percent have 100 percent employee participation.

18 percent of small businesses with revenue between $10 million and $20 million still do not use direct deposit.

Businesses with less than 75 percent salaried employees are most likely to not use direct deposit.

Savings Breakdown

According to NACHA:

It costs a business up to $2 to cut and process a hard-copy check vs. 35 cents or less for direct deposits.

A business with 25 employees would save at least $2,000 a year with direct deposit. A business with 100 employees would save at least $7,000.

NACHA and PayItGreen, a NACHA-led coalition that educates consumers and businesses about the environmental impact of choosing electronic payments, have created a calculator to reveal any business’ carbon footprint savings by switching to direct deposit.​



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