Direct Deposit is a Success for U.S. Employees and Businesses, NACHA Tells House Subcommittee

Direct Deposit is a very successful electronic payment product that provides numerous benefits to both employees and employers, according to testimony submitted today by NACHA - The Electronic Payments Association to the U.S. House of Representatives Committee on Small Business, Subcommittee on Tax, Finance and Exports.

"Direct Deposit is simply the most secure and reliable way to get paid," wrote Elliott C. McEntee, President and Chief Executive Officer of NACHA, in the testimony. "There are at least 115 million people in the United States that rely on Direct Deposit to receive their money."

NACHA reported to Congress that there were 3.7 billion Direct Deposit payments made in 2001 worth more than $4 trillion, and that use of Direct Deposit is increasing by approximately 10 percent per year. NACHA also estimates an economic saving in the United States of more than $8 billion in 2001 through the use of Direct Deposit.

Employees that use Direct Deposit benefit by getting their pay on time, every time, even when they are not at work. Employees also get faster access to their money than with a paper check. Employers benefit from Direct Deposit through cost savings of up to $1.25 per payment and by providing a popular benefit to their employees.

At the same time, NACHA expressed opposition to proposals that prices for providing Direct Deposit services be regulated. NACHA noted in its testimony that the average price charged by a bank is about 10 cents per Direct Deposit transaction. Competition in the provision of payroll services has been very effective in keeping the quality of Direct Deposit services high while also keeping prices low.

About NACHA - The Electronic Payments Association NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at www.nacha.org.

First published on BankersOnline.com 4/22/02