Popular Alternatives to Direct Deposit

Direct deposit alternatives

Whether you’re looking for faster processing times, better accessibility or broader international capabilities, several direct deposit options can help.

Paper checks

While paper checks are ubiquitous, mobile check deposits have made them more convenient. Employees no longer have to drive to the bank to deposit their paper checks. They can take a photo of the check on their mobile device and deposit it using their bank’s mobile app. This may be the best bet for a business with very few employees.

Paper checks are more complicated for nonbankers. Banks are not obligated to cash checks for someone without an account and you also run the risk of check fraud with this method.

Online banking alternatives

Online banks and digital payment methods have become widely accepted; even traditional banking institutions have online portals that make accessing funds and services easier. As the internet has evolved and security measures have become more reliable, digital banking alternatives have increasingly emerged. 

Consider the following options.

Simple

Simple offers consumers an entirely online banking experience. Funds are held by Compass Bank, which is Federal Deposit Insurance Corp.-insured, similar to a traditional bank. The company offers its account holders a Visa card, cross-platform mobile apps and a sleek web interface that facilitates a seamless banking experience from any digital platform.

When you transition to an online bank, you receive all the benefits of a traditional bank, such as bill pay, ATM access, direct deposit and savings assistance. One key difference is that Simple’s services are more widely available to individuals with limited or less-than-stellar banking histories.

PayPal

PayPal is probably the most widely recognized alternative to direct deposits. The company accepts payments from various sources and offers several tools, including the following:

• PayPal app: In addition to taking electronic deposits, the PayPal app allows users to cash checks and have them instantly credited to their PayPal account. 
• PayPal banking services: To reach people without access to traditional banking services, PayPal can function as a full-service digital bank. The company allows its customers to have their entire paychecks, government payments and tax refunds directly deposited to their PayPal prepaid debit card. You can access funds from a PayPal debit card as soon as you receive them.

To use PayPal to pay your team, follow these steps:

1. Set up a PayPal business account. (Your employees must have PayPal personal accounts.) 
2. Sign up for PayPal Payouts. PayPal Payouts is a mass-pay option that allows businesses to send money to multiple people (up to 5,000) at once. 
3. To pay your team, you’ll upload a file with your employees’ email addresses and phone numbers, review it and then send the payouts. 

While signing up is free, an instant transfer with an eligible linked debit card or bank account warrants a fee of 1.75 percent of the amount transferred, with a maximum fee of $25. Standard transfers are free. 

Sending money funded by your PayPal Cash or PayPal Cash Plus balance or the linked bank account is also free within the United States. However, if the money comes from a credit or debit card, you will be charged 2.9 percent of the amount funded plus a fixed fee of 30 cents.

Western Union

The name “Western Union” is practically synonymous with secure funds transfer. Established in 1851, the company has adapted to changes in technology and consumer demand to evolve into a fully integrated digital platform, providing powerful alternatives for people who don’t want to work with traditional banks. 

The Western Union NetSpend program provides a prepaid Mastercard to which funds can be added via direct deposit, Western Union money transfer transactions and transfers from traditional banks. Employees can get started by submitting their name and mailing address. Once they receive their card, they can activate it online or over the phone to confirm their identity. 

Transfer fees are relatively high, but you can estimate yours beforehand.

Wise

Wise is the product of professionals who were frustrated with the cumbersome nature of traditional banking institutions. The company was developed in Estonia and is based in the United Kingdom. It is widely considered one of the top options for individuals or businesses with numerous international clients, employees or business partners. 

With a Wise borderless account, employers and employees can send and receive funds from people in Australia, the U.K., New Zealand, Singapore, Hungary, Turkey and European countries that use the euro.

Prepaid debit cards

Prepaid debit cards ― also called pay cards or payroll cards ― are an excellent option for individuals who want to distance themselves completely from banking. Because major payment processors like Visa manufacture these debit cards, they can typically be used anywhere that accepts electronic payment. They can also be reloaded or used at an ATM to withdraw cash.

Depending on an employee’s location, various state laws and regulations govern the use of prepaid debit cards. Check your state’s rules to learn what you must do to comply with all regulations.

Prepaid debit cards are convenient, instantly usable, cost-efficient and less likely to be fraudulent. However, employees may have fees to check their balance or withdraw money. 

The best payroll services for direct deposit alternatives

You can offer your employees alternative payment methods without complicating your payroll process. The best payroll services allow you to integrate various payment methods while ensuring flexibility and convenience for your business and employees. 

Consider the following payroll services that support alternative payment methods:

• OnPay: With OnPay, you can print and send paper checks to your employees and distribute funds through paycards. Our OnPay payroll software review explains how this service offers unlimited payroll runs, payroll tax management and seamless integration with various accounting programs.
• ADP: Whether you want to pay employees via prepaid debit cards or paper checks, ADP delivers flexible options. This service also lets employees conveniently manage their payroll information, reducing administrative responsibilities. Read our ADP payroll review to learn more about how ADP can help you simplify your payroll process.
• Rippling: If you’re looking for ease of use, make Rippling your first consideration. This service’s intuitive software lets you run payroll in as little as 90 seconds. You can choose how you want to pay your employees without complicating the payroll process. Check out our Rippling payroll review to learn about this service’s other features, including expense reimbursement and professional employer organization services.
• Paychex: Mail your employees paper checks or pay them via paycards. You can also decide whether to run your payroll weekly, biweekly, semimonthly or monthly so you have full flexibility. If you’re like many other business owners and find tax season to be a hassle, Paychex offers automated tax filing. Learn more about why this service is a top choice for businesses of all sizes in our Paychex payroll review.
• Gusto: This payroll service offers various payment options while ensuring seamless processing. When you need to add new employees or contractors to your system, you can input their information easily. Gusto also allows employees to access their digital pay stubs and tax information, so they don’t need to request it from human resources or management. Learn more about how Gusto makes payroll processing easy for everyone in our Gusto payroll review.
• isolved: This service offers a holistic solution for small businesses looking to streamline their payroll operations and offer alternative payment methods to their employees. isolved facilitates efficient payroll processing and allows you to customize your services as needed. It offers a range of employee self-service functions so you can take a more hands-off approach to managing shifts and scheduling. Read our isolved payroll review to learn about this service’s many features.

It pays to have payroll options

Your employees work hard to support your business’s success. Contribute to their satisfaction by giving them a say in how they get paid. This choice doesn’t have to add hassle to your payroll process. By selecting a payroll processing service that helps you set up direct deposit and accommodate different payment methods, you can give your employees more choices while maintaining a streamlined and efficient payroll system.

Shayna Waltower and Rissa Ann contributed to this article.