Paying salaries

Knowing which employee payment approach to use takes an integral part of any business. Before you get to the measuring out wages step of the payroll process, you need to calculate employees’ gross payments and withhold taxes and other deductions. 

However, this article will not get into the necessary details of the payroll process. Instead, it will focus on diverse ways to pay employees, including check, direct deposit, pay cards, cash, and mobile wallet. 


Paying employees by paychecks is one of the most well-known payment approaches. You may think of paying your employees by either writing or printing payroll checks. Unlike payment methods engaging electronic funds transfers (e.g., direct deposit), employees do not need to have bank accounts to obtain their wages through tests. As an alternative, employees can use a check-cashing service (for a fee) to get their payments. Before deciding to offer this payment approach, consider the pros and cons. For instance, some employees may prefer the privacy of obtaining paychecks because they don’t need to share banking information. However, paychecks may get stolen or lost.  

Time and cost of using paychecks 

Handwriting paychecks can be time-consuming for employers. Writing down checks every pay period takes time, especially if you have several employees. If you decide to print out your employees’ paychecks, you can save quite some time from writing them all out. But if your printer does not work (or if you run out of ink), you may have to back up to handwriting check-records. Try planning to spend money on blank checks if you handwrite checks. Additionally, if you print paychecks, you always need to check stock, ink, and a printer. You might even need a particular MICR printer with magnetic ink. 

Direct deposit

Direct deposit is the most common payment approach, with 82% of workers in advanced economies using it. One of the most significant benefits of direct deposit is convenience. With direct deposit, there’s no need to hand an employee their wages physically. If an employee is on holiday, direct deposit recipients will get their payments on time. 

Once you obtain an employee’s banking information, you can directly deposit their wages each pay period through an electronic funds transfer (EFT). Before deciding to use direct deposit, comprehend the time frame for processing. If you do not run payroll through a particular day, your employees will not receive their wages when expected if you don’t expedite the process or use another payment approach.  

Time and cost of direct deposit 

Direct deposit is a relatively quick process if you do not miss your some time frame for processing. The most time-consuming part is setting a direct deposit. Consider that direct deposit comes with some fees that you need to know. You may need to pay set-up monthly payments, fees and a small charge each pay per. Yet, you may not be responsible for footing the direct deposit-bill. Once you have online payroll software, the direct deposit, basically might be incorporated at zero added cost. Generally, check to see if your payroll software provider suggests direct deposit at no additional charge.  

Payroll cards

A pay card (also known as payroll card) is a pre-paid card that employers can use to pay employees. Every payday, the map is loaded with the employee’s wages for that pay period. 

Employees can use the payment card like a debit card, or they can withdraw wages through an ATM or bank cashier. Unlike a direct deposit, employees do not need a bank account to receive their fees. 

Time and cost of pay cards 

Though using pay cards can save you time, there are several fees linked with this approach. As to set-up costs, employees may incur charges. Depending on your state, you may be demanded to pay these fees for your employees. 


Paying employees by cash is another version of payment that you have at your disposal. But if you choose to pay employees in stock, you must be very careful when it comes to keeping records. 

Cash payments to employees may make the tax authorities doubtful that you aren’t taking out the correct tax amounts. Paying employees in cash makes it more complicated for you to keep track of payroll records. Unlike other payment methods, there is not an automatic audit trail (e.g., bank records) when you pay in cash. 

Cost and time of paying cash-paying employees in cash do not require instant fees like with direct deposit, payroll cards, and paychecks. 

However, paying in cash puts you at a higher risk for a taxman audit, which costs considerable time and money. 

Mobile wallet

Another payment choice increasing in popularity is the use of mobile wallets (e.g., Venmo or Apple Pay). 

Mobile wallets for payroll demand you to deposit employee wages into their phone’s electronic accounts. Employees with mobile wallets can use the money in their accounts to make purchases. 

Time and cost of mobile wallets

Depositing money into employees’ mobile wallet is a quite streamlined operation for both employees and employers. 

But before picking up mobile wallets as your payment method of choice, consider the associated fees. Fortunately, the prices for person-to-person transfers are either nonexistent or small when paying with a bank account. However, employees might have to pay a fee when withdrawing money from their mobile wallet.  

Providing a pay stub 

Depending on your business location, you can be required to provide a pay stub to your employees—despite their payment approach. Pay attention to pay stub demand by a state to stay compliant. 

So, what is a paystub? Pay stubs indicate employees their gross pay, deductions, and net pay. Consider a pay stub like a receipt that shows employees you have paid them. 

Payroll recordkeeping 

Despite the payment methods for employees, you need to keep accurate records for at least three years. 

Write information down like the amount, date and pay period for all employees. And, record deductions, gross wages and net pay. 

Paying employees by taking the state laws into account

Can an employer demand direct deposit, pay cards, cash, paychecks, or mobile wallets? 

Most states have laws that control when you can make particular types of payment mandatory, like direct deposit and pay cards. Typically, you will need to present more than one payment approach to your employees. For instance, you can offer employees the option to get their wages via direct deposit or by paper checks. That way, employees without bank accounts can obtain their payments.

When choosing how to pay employees, it is essential not to break state laws. Work with your employees to assure the payment method works for them.