Direct Deposit Can Help Save Money, the Environment

By Bill Leonard March 20, 2009

The traditional paper paycheck might soon be a relic of the past as more employers understand the cost savings and environmental benefits of direct deposit. A new study from the PayItGreen Alliance shows employers have saved more than $600 million per year for the past 10 years by paying employees via direct deposit—for a total cost savings of $6.7 billion since 1998.

The alliance’s research found that employers save an average of $176.55 per year for each employee paid by direct deposit. The study revealed that the environmental benefits of direct deposit have helped employers to establish corporate “green policies” and raise awareness among employees to be more cost conscious and “eco-friendly.”

According to the study results, if a business that employs 300 people and issues paychecks every two weeks switches its employees to direct deposit, the company would in one year:

  • Save 121 pounds of paper.
  • Avoid the release of 1,159 gallons of wastewater.
  • Eliminate the release of 346 pounds of greenhouse gases into the atmosphere.

The total environmental impact for that company would be equivalent to not driving 1,231 miles in a car, preserving 151 square feet of forest and planting 15 trees and growing them for 10 years.

The number of employers that offer direct deposit has steadily increased over the past 10 years. Data from the Federal Reserve Bank in 1998 showed that 46 percent of businesses in the United States offered direct deposit; that number had climbed to 66 percent by 2008.

The attitude among employees toward direct deposit has changed. The Federal Reserve data in 1998 found that 35 percent of workers who didn’t have access to direct deposit said they would use it if they had the option. Ten years later, 76 percent of employees reported that they would use direct deposit if they had access to it.

Bill Leonard is senior writer for SHRM Online.



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