Direct Deposit vs Check: Which Is the Better Way to Pay Your Employees?

There is an endless list of responsibilities when you own a business. Small decisions are bound to take up more time than you expect.

With more pressing matters to focus on, let’s explore one of the biggest choices you have to make: how to pay your employees.

The choices are simple, direct deposit vs. check.

If you want to know which is the better way to pay your employees, read on.

Direct Deposit

Direct deposit is the transfer of a payment directly from the account of the payer to the recipient’s account.

Let’s take a look at the benefits of direct deposit.

Ease of Use

Direct deposit is simple and easy to set up. The employees will fill out their bank information for which accounts they want the deposit in and voila! You’re able to pay your employees anytime and everywhere.

Businesses can save money by not having to do the physical work associated with paper checks. They need to be written, printed, and mailed. There’s also the cost of re-issuing lost or stolen checks.

The convenience of direct deposit saves employees a trip to the bank and employers the headache that come with paper checks.

Safer Than Checks

Since employees are providing their bank information, there is a slim chance that the funds will be misplaced. Paper checks are easier to lose and are notorious for check fraud.

You can avoid the headache of a check getting lost, stolen, or altered by using direct deposit.

The Downside of Direct Deposit

As always, there are drawbacks to everything. With direct deposit, you aren’t able to stop payments like you can with a check. Even if it saves you money in certain aspects, there are still fees associated with direct deposit as well.

Even with the benefit of saving time, you often have to be on top of everything because of how long it might take to process the payment.

Paper Checks

Despite the ease of direct deposit, many employees prefer traditional paper checks as their form of payment. What are their pros and cons?

Privacy and Control

Many employees prefer paper checks because it allows them to keep bank information private from their employers. This gives employees a sense of ease and confidence with their employers when given the option to be paid by check.

Employees are also able to have complete control over their money. They’re also able to conceal their earnings from spouses if need be.

Different Type of Convenience

Another benefit of paper checks is that they offer the convenience of appealing to employees without a bank account. When you choose paper checks, you also won’t have to worry about bank fees.

The Downside of Paper Checks

As mentioned earlier, one of the biggest cons of checks for employees is that they can easily be lost or stolen. This not only forces you to pay to replace it but adds more to the workload.

Environmentally, paper checks are a lot less green than direct deposit is. It is more costly and wasteful to use paper checks than to use direct deposit.

Regardless of what you decide is a better option to pay your employees, this is our recommended paystub maker.