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Direct Deposit has been a part of our banking system for more than two decades, and employers commonly use it to issue employees their wages directly into their bank accounts. Today, Direct Deposits can be used to pay taxes, bills, and other charges.
Nacha Launches Campaign to Reach Millennials on the Benefits of Direct Deposit
PaymentsJournal Nacha Launches Campaign to Reach Millennials on the Benefits of Direct Deposit
“Direct Deposit has been around for quite some time and it’s very well received throughout the United States,” said Debbie Barr, Senior Director of ACH Network Rules Process & Communication at Nacha. “Over 93% of American workers use Direct Deposit. We know the federal government uses Direct Deposit for tax refunds and EIP [economic impact payment] payments. But what we really wanted to know was to dig down deeper into one segment of the population: We decided to look at the millennials.”
Nacha, the payment system organization that manages the ACH (Automated Clearing House) Network, recently launched a campaign to encourage millennial workers to use Direct Deposit to receive their wages directly into their bank accounts. The survey consisted of 700 U.S. consumers ages 22–34. Half of the millennials surveyed were W-2 workers and the other half were gig workers. Here are the findings.
“What we found was that 97% of those surveyed have a bank or credit union account,” said Barr. “This means that they already have the tools they need to receive Direct Deposit. Eighty-three percent are already receiving their pay by Direct Deposit. Seventy-one percent said they primarily keep their money in their bank or credit union account. Almost all of them have deposit accounts. The vast majority have savings accounts. That’s a great thing as we think about Split Deposits. The top uses for Direct Deposits are salary, wages, receiving those tax refunds, and EIP payments.”
Barr believed receiving Direct Deposit creates a gateway to the many other benefits of using the ACH Network. “Receiving Direct Deposit creates this great foundation for using ACH for other things, like your bill payment,” she said. “The more you use ACH, you get this level of trust because you see the benefits of ACH, the reliability, the convenience.”
Barr continued, “With the trust level, we found that 80% of those who received their salary with Direct Deposit consider it highly trustworthy, giving it an 8, 9, or 10 out of a scale of 10. So that is exciting for us. It builds that foundation that moves them into using ACH for other things like Direct Payments. Seven out of 10 said they use Direct Payment for at least one bill each month. We were very happy to see those results.”
“I don’t think I’ve seen a paycheck in 25 years,” said Brian Riley, Co-head of Payments at Mercator Advisory Group. “It goes in, everything works, and it’s flawless. I had an issue with one of my kids — my daughter was filing her taxes [and] she checked off that she did not want to get an ACH on her tax refund but wanted a check. I said, ‘Do you realize that will add about five weeks until you actually get the funds?’”
Who Are the Millennials and How Do They Get Paid?
Nacha’s reasons for targeting millennials as a group to potentially benefit from Direct Deposit are well-founded. These college graduates are entering the workforce, are earning salaries, and have a car payment.
“These are college graduates; they have annual salaries of at least $35,000 a year,” said Barr. “They all had either a student loan or a car payment. That really tightened up the group for us. With our W-2 employees, 88% are already using Direct Deposit. But less than half [47%] of gig workers are getting paid that way. We see a great opportunity there to educate that audience on the benefits of Direct Deposit. Some in our survey do both — they have their W-2 job and they also do some side work. With that group, we found that 92% of those were using Direct Deposit at least once a month to receive their pay.”
Barr continued, “With our gig employees, just over half [56%] are primarily storing their money in bank accounts. The rest are storing them in nonbank payment apps. So that’s a great opportunity to talk to them about the benefits of using Direct Deposit and having that bank account available for that.”
“This is basically a no-lose strategy,” said Riley. “It’s cheaper for the employer to do a DDA (daily demand deposit account or checking account) drop than it is to cut a check. That’s a significant channel. For the employee, it loads up that account quicker and [they do] not have to wait for funds to clear through a check deposit.”
A Look into Nacha’s Campaign
Many benefits are tied to Direct Deposit payments. They are a fast, reliable, convenient, and environmentally friendly way to get paid. Nacha understands that as workers age, there will be a natural increase in ACH use as they begin to add utility payments, mortgage payments, and additional car payments. The time to educate millennials on the value of using Direct Deposit is now.
“We started our campaign looking at three different channels,” said Barr. “We have display ads that follow our targeted market audience throughout their internet [use]. We also have some native ads that, if they [millennials] are online and looking at articles, the native ads will be there, too. We also have 15-second videos where we picked three different types of gig workers. These are real gig workers that are doing their job, working hard, trying to get their pay. We have one that is in food delivery. We have one that is in rideshare, and one that is a dog walker. They are in our static ads and in our videos. Using Direct Deposit, their pay arrives when they expect it, and it’s there for them to use.”
“We really wanted to push this campaign out to help them understand like, ‘we know you guys are working hard and you deserve to get every dollar that you’re paid,’” Barr added. “And getting [paid] on the day you expect it. Making sure they understand all the benefits [that] go along with having Direct Deposit as your payment choice.”
Did Nacha receive any pushback from respondents about Direct Deposit? The study found that pushback stems more from a lack of education and awareness for this option than from an opposition to using this system.
“It’s really an education piece more than there being a holdback, so it’s helping people to make sure they understand the ease of signing up for Direct Deposit and the reliability that your pay will be there when you expect it to be,” said Barr. “And the security. There’s always a little concern when we do anything online that there might be some issues, but the ACH Network is a very secure way to make your payments.”
“It doesn’t cost anything,” said Riley.
Helping Millennials to Adopt Direct Deposit
To learn more about all the benefits that Direct Deposit has to offer, millennials can easily get more information on Nacha’s dedicated website.
“Visit our website, directdeposit.org/gigworkers,” said Barr. “There you will see a lot of great tools.”
Barr also invited financial institutions to get onboard, spreading the news about how Direct Deposits benefit both employers and employees.
“We want our financial institutions [involved] because they touch both sides of the transactions,” said Barr. “They have the employers as their corporate customers and making sure the employers understand that Direct Deposit is a great benefit to them to offer besides being a benefit to their employees. It’s more economical. It’s easy once it is set up. Making sure that the employers have the tools they need to get the Direct Deposit set up but also to educate their employers or their employees on the benefits of ACH.”
“Our financial institutions also have the employees as their customers,” Barr added. “We have the millennials with their bank accounts, and so making sure they understand the benefits of Direct Deposit. With that age group, they have the phone in their hand all the time. They have the bank app on their phone. Making sure they understand where in their bank app they can grab that routing number, the account number, the information they need to sign up for Direct Deposit, and know what it is. It’s probably on the app, but can they find it? Make it easy, clear, and call it out. The beauty of ACH is once you’re signed up, it’s set it and forget it.”
Direct Deposit is more ubiquitous than ever, as more providers are offering it as part of a payroll provider’s offering.
“Direct Deposit is something that is offered across the board. Any of your major payroll providers and the majority of the smaller, independent payroll providers know ACH, know Direct Deposit — it’s something they are able to offer,” said Barr. “It shouldn’t be something that you have to educate your payroll provider on.”
“As you start receiving ACH credits, you get that comfort level with ACH. You start doing some Direct Payments for this group [millennials] — it may be their student loans, their car payment that they set up as auto pay. As we age, we add more lifestyle payments such as utilities, mortgages, subscription services, donations — there’s so many opportunities for Direct Payment. As consumers age, they add more lifestyle payments and the more they add as Direct Payment, the easier it is. It’s such an easy way to handle your finances and manage your money.”
Check out directdeposit.org/gigworkers for tools and more information on the benefits of Direct Deposit.