N.Y. Lags in Direct Deposit; Banks, City Share Blame

Article excerpt

The New York Clearing House Association's push to increase direct deposit participation in New York City is successful in some quarters but is meeting resistance in others.

Use of electronic payroll deposit by employees of private companies generally has been rising, but efforts to enroll some city employees are being hindered by city policy and lack of bank support for enrollment efforts, observers said.

Thirty-eight percent of employees in the New York Fed district are paid by direct Thomas deposit, which involves electronic transmission of funds to their accounts through the automated clearing house network.

The national average is 45%, according to the National Automated Clearing House Association. The New York Fed district includes New Jersey, Puerto Rico, and the Virgin Islands.

Backed by about 150 banks and credit unions, the New York Clearing House Association embarked last year on a push to increase participation.

The effort has resulted in fruitful discussions with major regional employers such as Colgate Palmolive Co., Weight Watchers, and the State University of New York. In some companies, direct deposit adoption rates exceed 90%.

On other fronts, though, the Clearing House Group still is having trouble getting participation to rise. For example, only about 39,000 of the city's 97,000 public school teachers use direct deposit, a direct result of the N.Y. Clearing House efforts.

According to George Thomas, senior vice president at the New York Clearing House, this stems partially from the city government's decision to make employees paid weekly ineligible for direct deposit. …