An analysis by human resources and payroll provider Automated Data Processing (ADP -1.59%) found that $49.5 billion worth of checks were cleared in 1995; by 2020, the amount had plummeted to $11.2 billion. Fewer than 10% of U.S. employees received their pay via paper checks in 2019, ADP reported.
Federal law now requires all federal government payments -- except those made under the Internal Revenue Code, like tax fund refunds, hardship waivers, and emergency payments -- to be made via direct deposit. Besides paychecks and tax refunds, direct deposit is also commonly used for:
How to set up direct deposit
Setting up direct deposit is generally a fairly easy task. Generally, if you want a paycheck sent directly to your account, your employer has a form with the required information. You'll need to provide:
- Employer name and address
- Your name and address
- Account type
- Account number
- Routing number
Many employers will also allow you to make deposits to multiple accounts. You can simply assign the percentage or dollar amount to be deposited to each. The paperwork can be different, but you'll need the same information to start direct deposits as you would for other types of payments, such as Social Security benefits, vendor payments, or rental income.