Paper Checks vs. Direct Deposit: An In-Depth Look at The Pros and Cons

December 19, 2022
minute read

There are a few types of payment methods employers can choose, a popular option being direct deposit. Business owners can also pay their team with handwritten or printed paychecks.  

As the world becomes increasingly cash-less, digital payment methods are the more common choice. With that said, handwritten or printed checks are still useful in today’s climate.  

As a business owner, it’s your duty to understand the pros and cons of either option. Before deciding which payment method is the best option for your company, weigh their pros and cons. Each come with their own advantages and disadvantages to make note of.  

Paper Checks: The Pros and Cons  

Call it the traditional way of payment. A paper check draws money directly from an account. The payer, or the one who writes the check, must write the name of the payee on the “pay to the order of” line.

The payer will then sign the signature line to endorse it. Since paper checks are the “old-fashioned” way for employers to pay their team. Although times are changing, there are still plenty of notable pros to this form of payment.  

The Pros of Paper Checks: Save Money

Distributing and depositing paper checks is fairly low considering the only thing an employer needs is a bank account. Depending on their bank, their cost can range from $25 to $100.  

Employees have the option to cash their checks at a facility like Currency Exchange if they want to avoid bank account set-up fees.

The Pros of Paper Checks: Privacy and Control

If an employee prefers not to share their bank account information with their employer, paper checks allow them more privacy than direct deposit. When their bank account information is private, they have more control over who can access it.  

Unlike direct deposit, paper checks grant employees more flexibility with their earnings. They can decide where they want to cash or deposit their check. They can also decide when they want to do so.  

The Cons of Paper Checks: The Build Up of Fees

Time is money. When an employee deposits or cashes a paper check, they’re doing so on bank time. They may be unable to cash their checks until the next business day, depending on when they receive their paycheck.  

Many banks are closed on holidays with limited hours on Saturdays and Sundays. Sometimes, this can serve as a major inconvenience for employees. Distributing paper checks requires employers to order supplies that costs time and money.  

Depositing or cashing paper checks causes employees to spend more time driving to and from their bank.  

The Cons of Paper Checks: They Can Be Misplaced  

With paper checks, employees are more at risk for having them stolen, damaged, or misplaced. In the event that a paper check is lost, the employer has to replace the check. More often than not, replacing a check costs extra for the employee.  

If a check is stolen or lost, they can pose as a threat to a business. They contain sensitive information like a business’ account and routing numbers. Consider this: a paper check showcases all the necessary information for someone to access your bank account.

Direct Deposit  

In banking, a direct deposit is classified as the electronic transfer of a payment from the payer’s account to the payee’s account. In recent years, it’s become a common payment method in the workplace, and it’s widely regarded as a convenient option in today’s digital world.  

Regardless, there are pros and cons to direct deposit.  

The Pros of Direct Deposit: Save Time and Money

With direct deposit, employees can choose which account they want their earnings deposited into and they’ll have access to those funds immediately. In addition, employees can accept their payment from anywhere. In other words, they don’t have to be at work to do so.  

The transaction is automatic and eliminates having to drive to and from the bank. This applies to both the employee and the employer.  

The Pros of Direct Deposit: Security  

A payment transmitted electronically cannot be stolen, lost, or misplaced. This provides relief to the employer and the employees. With direct deposit, no one has to worry about losing a paycheck that displays confidential information.

Direct deposit is a secure payment process for both parties involved.  

The Cons of Direct Deposit: Time Sensitivity  

Employees must frequently keep track of time and attendance records for direct deposit to be available every payday. It’s possible to receive a late payment with direct deposit if the employee fails to keep an eye on attendance records.  

Expediting the payroll process could generate additional fees. With a structured system in place, this can be avoided.

The Cons of Direct Deposit: Bank Fees

Direct deposit can include set-up fees for employers. These fees can cost anywhere from $50-$149 depending on the size of your company. In some cases, banks will charge monthly fees. To be sure, check with your bank before set-up to see if they do so.  

The Best Option for Your Business

Direct deposit is considered an electronic funds transfer, or an EFT that deposits an employee’s payments into their bank account. Paper checks grant employee’s the responsibility of cashing them on their own time.  

Depending on your business, either option could be the better fit. With their pros and cons in mind, evaluate your company’s top priorities and make an informed decision.  

At FRIDAY, we offer both direct deposit and check options for receiving your pay, and there is no additional cost for either option. So whether you prefer to have your team paid via direct deposit or physical checks, we have you covered. We believe that giving you the choice and flexibility to choose the payment method that works best for you and your team is an important part of our commitment to providing excellent service to our clients.

FRIDAY Helps Small Business Manage and Pay Their Team  

When it comes to managing, tracking, and paying your employees, additional help goes a long way. FRIDAY is the simplest software created to help small businesses manage, track, and pay their team without any paperwork involved.  

FRIDAY is an easy to use, yet powerful payroll and team management solution.  


All information on or distributed by this Site is intended for general informational purposes only.