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Payroll alternatives to direct deposit

PublishedJul 9, 2025|Time to read min

    Quick insights

    • Direct deposit is a widely used method for employees to receive payment from employers.
    • Some alternative options to direct deposit include paper checks, cash, digital payments and payroll cards.
    • A payroll card is a prepaid card that an employer loads with an employee’s wages each pay period.

    Starting a new job can be an exciting and stressful time. New employees might need to adjust to a new weekday routine or learn a new route to the office. But arguably most importantly, new employees will need to work with their employers to set up payroll.

    Direct deposit is a common way of distributing employee pay, but it’s not the only option. There are other ways, and as payment methods continue to evolve—thanks in part to technological advances and consumer habits—employees may consider exploring alternatives, especially if they don’t have a bank account.

    Read on to learn about some alternatives to direct deposit as well as some considerations associated with each.

    How direct deposit works

    Direct deposit is a payment method where funds are electronically transferred directly into the employee's bank account, bypassing the need for payroll checks. This system is widely used by companies for disbursing employees' pay.

    To enroll in direct deposit, the employee will need to:

    • Obtain and fill out a direct deposit authorization form
    • Provide their account information
    • Select a direct deposit amount
    • Provide a voided check

    The employer uses that information to deposit their paycheck directly into their account each pay period. The transfer of money is made possible by the Automated Clearing House (ACH) network, a network that batches and processes digital payments between banks.

    However, not all employees have a bank account that can accept direct deposit. Also, sometimes a company may need to send a one-time payment to an employee or contractor. If so, they may want to consider alternative payment methods.

    Payroll alternatives to direct deposit

    As bank options have expanded and changed, employees may want or need more flexibility in payment options. Not to mention, some businesses and employees might prefer alternatives to direct deposit whether due to a lack of a bank account or the desire for more flexible payment timing.

    Let’s explore a few other payroll options.

    Paper checks

    For decades, getting a paycheck meant receiving a physical check from an employer. While this method is no longer the norm, paper checks still provide a traditional alternative to direct deposit.

    Unlike direct deposit, which is often automated to occur on a set date, employers may be able to issue a physical check at any time.

    However, cashing checks can be a manual process that requires more effort on the employee’s part. For companies that want to issue multiple or regular paper checks as an alternative to direct deposit, there are bill pay companies that can provide this service.

    Payroll cards

    Payroll cards are a modern alternative to paper checks. A payroll card is a prepaid card which an employer loads with an employee’s wages each pay period. Instead of receiving a check or having funds deposited into a bank account, employees receive their pay on a card that functions much like a debit card.

    It may be beneficial for employees who do not have bank accounts because it provides immediate access to funds without the need for check-cashing services. Additionally, payroll cards may often be used where debit cards are accepted.

    However, some payroll cards include fees for withdrawals, balance inquiries or even inactivity, which has the potential to erode the value of the employee's earnings.

    Cash payments

    Cash is another payment method that employees may consider. A cash payment is immediate and may happen at any time, provided the employer has cash on hand.

    However, having enough cash to pay employees may be impractical. Not to mention, tracking cash payments may be more challenging to track than payments that have an electronic or paper trail. Companies that rely on cash payments may need a sound bookkeeping system to track cash payments for tax purposes.

    This method also may not be ideal for employees are there are no protections if you lose the cash.

    Online banking and digital payment methods

    Online payments have become widely accepted, as the internet has evolved and digital payment methods have become more reliable. Employers may consider the following digital alternatives:

    • Digital wallets: Digital wallets are applications that store payment information and more on a mobile device.
    • Peer-to-peer payments: Peer-to-peer payment or cash apps allow for the transfer of funds electronically between individuals and businesses. They are often apps you download and may be integrated with your online bank account.

    Receiving a paycheck via a digital or mobile payment system may provide an efficient way for an employee to be paid. Payments may happen near instantly, and the employer has control over when those payments happen. This payroll alternative may be helpful for paying one-time invoices or freelancers who do occasional work.

    However, like cash payments, it may be harder for employees and their employers to track payments, especially for tax purposes. In addition, some digital payment systems may charge fees or be subject to daily, weekly or monthly transfer limits.

    In summary

    Direct deposit is a low-hassle and secure way for companies to issue payroll. However, companies may have reasons to explore alternatives to direct deposit like paper checks, payroll cards or digital payments. Before requesting a change to their payroll method, employees may want to consult their employer to see which options are available.

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