As more people embrace the immense scope of the digital world, the trend of moving away from physical businesses has increased. Many successful entrepreneurs and small business owners work in a world that is made up of entirely online interactions, services and products. An increased demand for alternatives to direct deposit have come as we move away from physical businesses.
For many years, the only people who needed an alternative to direct deposit were those who had suffered financial difficulty and who had limited access to traditional banking services. This is no longer the case, and now the demand for alternatives to direct deposit is on the rise across all sectors of the economy. Read on for a few of the solutions that we have been seeing gain the most traction more recently.
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Thanks to new tech developments, you can now send money digitally, using platforms like PayPal or Venmo. These allow you and your employees to hook up your accounts, so you can transfer money to them per project/pay period.
You decide whether you want to connect your bank account or a particular card, and your workers have the same choice. In other words, each of you is in control of where you're withdrawing/receiving money and whom you are sending it to/accepting it from as reimbursements.
While paper checks have been used for quite some time now, mobile check deposits are making them more convenient. Employees no longer have to drive to the bank to deposit their paper checks; they can take a photo of the check on their mobile devices and deposit it using their bank's application. This may be the best bet for a business with very few employees.
However, for nonbankers, this option is more complicated, as banks are not obligated to cash checks for someone who does not have an account. You also risk check fraud with this method.
Online banks have become widely accepted and even traditional banking institutions have online portals to make accessing funds and services more user friendly. As the Internet has evolved and security measures have become more reliable, an increasing number of digital banking alternatives have emerged.
Simple offers consumers an entirely online banking experience. Funds are held by Compass Bank and they are FDIC insured just as with a traditional bank. The company offers their account holders a Visa Card, cross platform mobile apps, and a sleek web interface that facilitates a seamless banking experience from any digital platform.
One of the benefits of transitioning to an online bank is receiving all of the benefits offered by a traditional bank such as bill pay, ATM access, direct deposit, and savings assistance. One key difference is that the services from Simple are more widely available to individuals who may have limited or poor banking history.
PayPal is probably the most widely recognized alternative to direct deposits and a company to watch. The company accepts payments from a wide variety of sources and while they do have the capability to transfer your funds to a bank account they can also be used as a bank.
With PayPal, it is possible to access funds from a PayPal debit card as soon as they are received. In addition to taking electronic deposits, the PayPal app also allows users to cash checks and have them instantly credited to their PayPal account.
PayPal recently made a move to increase its ability to function as a full service digital bank. The company now allows its customers to have their entire paycheck, government payments, and tax refunds directly deposited to their PayPal Prepaid Card.
The name Western Union is synonymous with secure funds transfer. The company was established in 1851 and has adapted to changes in technology and consumer demand to evolve into a fully integrated digital platform that provides powerful alternatives for people who are not interested in working with traditional banks.
The Western Union NetSpend program is a prepaid mastercard which can have funds added via direct deposit, Western Union Money Transfer transactions, and transfers from traditional banks.
TransferWise is the result of modern businessmen who were frustrated with the cumbersome nature of traditional banking institutions. The company was developed in Estonia and is based in the United Kingdom. It is considered by many to be one of the top options for individuals or businesses with numerous international clients, employees, or business partners.
With one of TransferWire’s borderless accounts it is possible to receive direct deposits from people located in a wide variety of countries including: Australia, European countries using the Euro, the United Kingdom, Austria, Belgium, the United Arab Emirates, Norway, the Philippines, Hungary, Hong Kong, Greece, Latvia, Slovakia and more.
Prepaid Debit Cards
Prepaid debit cards are an excellent option for individuals who want to distance themselves completely from banking. The method is similar to direct deposit but exists for workers without bank accounts. Because these debit cards are manufactured by major payment processors like VISA, they can typically be used anywhere that accepts electronic payment. They can also be reloaded or used at an ATM for cash back.
However, depending on the employee's location, there are state laws and regulations you should familiarize yourself with before choosing this method. This method is convenient, instantly usable, cost efficient and comes with less risk of fraud. But there may be fees for employees when checking a balance or withdrawing money.
There are numerous options available, some of the most popular include those listed below.
Account Now was founded in 2004 and is located in San Ramon, California. Among its service offerings are a low cost solution for individuals and small business owners who want an easy way to have funds directly deposited and made accessible without the use of a traditional bank. Funds are immediately available via a Visa debit card and the company can send out checks with the funds to make payments.
Bluebird is similar to Account Now in functionality but is backed by American Express and Walmart. In addition to the benefits available with similar prepaid debit cards such as direct deposit, bill pay, and ATM withdrawal, Bluebird account holders can also add funds to their account at local Walmart stores.
There is no reason anyone should be tied to the restrictions of traditional banking if they do not wish to do so. The digital marketplace is making it easier than ever to control your finances in a way that best fits your personal and business needs. Stay tuned as we continue to monitor which other alternatives to direct deposit will gain momentum.
Additional reporting by Sammi Caramela.