Paper paychecks still work. But for most employers, they add cost, administrative complexity, and risk to a process that has already moved overwhelmingly digital.
In 2025, 92.7% of survey respondents received their wages through direct deposit. Only 3.3% were paid by paper check. The workforce has already moved to digital payroll.
Employers still printing checks should ask a simple question: what is paper actually costing us?
Direct Deposit Isn’t the Alternative Anymore. It’s the Default.
The federal government is making the same transition. A March 2025 executive order directed the Treasury to phase out most federal paper checks, noting that Treasury checks were 16 times more likely than electronic payments to be reported lost or stolen, returned undeliverable, or altered. Effective September 30, 2025, the order directed the Treasury to stop issuing paper checks for most federal payments, including benefit payments and tax refunds, subject to limited exceptions.
The lesson for employers is straightforward: if a payment is important, recurring, and time-sensitive, it should not depend on printing and transporting a piece of paper.
Employers should treat their own payroll the same way.
The Real Cost of a Check Isn’t the Check
The cost of a paper paycheck goes beyond the check itself. Depending on the payroll provider and service model, employers may incur per-check processing, printing, and delivery fees. And when a check is lost, stolen, or delayed, the costs can compound through stop-payment and reissue fees, along with the staff time required to research the issue and get a replacement to the employee.
Multiply that across dozens of employees, multiple locations, and 26 or 52 payrolls a year, and a ‘simple’ payment method turns into recurring add-on expenses that can often be reduced or avoided.
AllianceHCM customers do not pay an additional AllianceHCM fee to move employees from physical checks to direct deposit. We can help employers review their current check volume, identify avoidable costs, and reduce the administrative work associated with maintaining paper checks each payroll.
Paper Checks Carry a Higher Risk of Fraud
Fraud is not a hypothetical risk with paper checks. In the 2025 AFP Payments Fraud and Control Survey, 63% of surveyed organizations reported check-fraud activity in 2024, making checks the payment method most frequently targeted by fraud, ahead of wire transfers, ACH, and cards.
The survey covers organizational payments broadly rather than payroll specifically, but the underlying exposure is the same: a paper check is a physical, mailable, and alterable payment instrument. Direct deposit eliminates those particular points of exposure, although employers must still maintain strong controls over payroll access and employee banking changes.
Controls such as Positive Pay and security features built into check stock can reduce exposure, but they do not eliminate the underlying risk. AFP’s analysis found that between 63% and 66% of surveyed organizations reported check-fraud activity each year from 2020 through 2024.
Removing the check from circulation addresses the source of the risk instead of continually adding controls around it.
Payroll Shouldn’t Depend on an Office or a Physical Delivery
This matters most when something goes wrong. A storm disrupts an employer’s operations. A shipment to a satellite office is delayed. An employee works far away from the employer’s primary address. None of that changes what employees expect and deserve: to be paid on time.
That challenge is especially relevant for multi-location, hourly and shift-based workforces. Direct deposit removes the physical dependency entirely. Once payroll is processed, employees do not have to wait for a check to be printed, prepared for shipment, transported by a carrier, delivered, and deposited before they can access their pay.
That reliability isn’t a nice-to-have. Combined, 78% of workers said it would be somewhat or very difficult to meet their financial obligations if their next paycheck were delayed by a week (49.6% “very difficult,” 28.0% “somewhat difficult”). For an employer, a payroll delay is an operational hiccup. For an employee, it can mean a missed rent payment.
Going Digital Doesn’t Mean Leaving Anyone Behind
Not every employee has a traditional bank account, but that doesn’t have to be a barrier to digital payroll.
The answer to “some employees don’t have bank accounts” doesn’t have to be “keep the check running.” Employers can provide digital payment options that give employees access to their wages without requiring a traditional bank account.
Nationally, 4.2% of U.S. households are unbanked and another 14.2% are underbanked. For hourly, high-turnover, and multi-location workforces, that share is often higher than the national average. That means employers need payment options that accommodate employees with a wide range of banking relationships and financial needs.
Payroll cards and other digital payment methods can help employers serve employees who do not use traditional bank accounts while avoiding the printing and distribution of paper checks. Employers should structure these programs in accordance with applicable federal and state requirements, including rules governing employee choice, disclosures, fees, and access to wages.
AllianceHCM offers payroll card and digital wallet options for exactly this reason: going digital and serving unbanked employees are not competing goals.
From Payday to Pay Access
Direct deposit also opens the door to something a paper check can’t offer: more flexibility in how and when wages are accessed.
Earned wage access lets employees draw down wages they’ve already earned before the standard payday, without changing how or when payroll itself is processed.
For employers, the practical case is straightforward: earned wage access can be a valuable employee benefit, particularly for workers managing expenses between paydays, and it integrates with payroll that is already being processed electronically.
AllianceHCM’s On Demand Pay solution connects to a range of earned wage access providers through MyPay, so employers can offer this option without adding manual work to payroll.
A Practical Way to Reduce Paper Checks
Employers do not have to eliminate every physical check overnight. There may always be situations in which a paper check is necessary or legally required. The goal is to make paper checks the exception instead of the default, and to make the transition deliberately rather than waiting for a lost check, fraud attempt, delivery delay, or business disruption to force the issue.
Start with a controlled transition:
- Review how many physical checks you issue, which employees receive them, and why.
- Calculate the processing, delivery, replacement, and administrative costs associated with those checks.
- Identify employees who can enroll in direct deposit immediately.
- Offer compliant digital alternatives for employees without traditional bank accounts.
- Establish a timeline, communicate the change clearly, and preserve any payment options required by applicable law.
Whether you’re an AllianceHCM customer looking to reduce check volume or an employer evaluating new payroll options, our team can help you identify avoidable costs, evaluate digital payment alternatives, and develop an approach that works for your business and your employees.
Connect with our team to start building your transition plan.
Sources
- PayrollOrg, 2025 “Getting Paid in America” Survey Results; Nacha summary
- The White House, Executive Order: Modernizing Payments To and From America’s Bank Account (March 25, 2025)
- U.S. Department of the Treasury, Bureau of the Fiscal Service, Paper Checks Are Going Away
- Association for Financial Professionals, 2025 Payments Fraud and Control Survey, via Federal Reserve Financial Services and Nacha
- FDIC, 2023 National Survey of Unbanked and Underbanked Households
- U.S. Treasury, Direct Express program
- AllianceHCM, On Demand Pay
