46 percent of the paper checks written in the U.S., not including government checks, involve a small business, according to a new study released by NACHA — The Electronic Payments Association and FIS, the world’s largest provider of banking and payment technologies.
Respondents included 2,249 small business owners, chief executive officers or presidents, chief financial officers, controllers or treasurers, office managers, accountants, or bookkeepers. 24 percent of check transactions are small business B2B payments; 10 percent are consumer to small business payments; and 12 percent are for small business payroll, which represents 2.7 billion checks per year.
“There is a significant opportunity to reduce small business check use by encouraging adoption of Direct Depositâ€ said Janet O. Estep, NACHA president and CEO. “Many small businesses are unaware of the benefits of Direct Deposit, including time and cost savings, efficiency and convenience.”
Many small businesses state a variety of reasons for not adopting direct deposit. 46% say they have too few employees to justify it, 28% say their employees prefer checks or cash and 21% believe Direct Deposit is too expensive. Additionally, 26% of businesses surveyed responded that they were unaware of Direct Deposit or had never been approached by anyone about using it.
Of the businesses that already use Direct Deposit, 90% surveyed view it favorably. Adopting direct deposit can be beneficial and eliminate the cost of printing checks, allowing small businesses to save money that can be used elsewhere. Also by eliminating the printing of checks, businesses can become more environmentally friendly. Direct Deposit is a powerful tool more small businesses should incorporate into their payroll system.