Paychex partners with PayPal for direct deposit alternatives

Paychex Inc. (NASDAQ: PAYX) announced a partnership with PayPal Holdings Inc. (NASDAQ: PYPL) to integrate PayPal Direct Deposit into its Paychex Flex Perks employee benefits platform.

The collaboration allows employees of Paychex customers to set up PayPal Direct Deposit, providing access to paychecks up to two days early. The service targets workers who may lack traditional banking relationships, addressing the 5.6 million U.S. households that were unbanked in 2023, according to Federal Deposit Insurance Corporation data.

Employees using the service can access PayPal's financial products, including the PayPal Debit Mastercard with 5% cash back on selected monthly spending categories up to $1,000, and PayPal Savings, which offers a 3.65% annual percentage yield through Synchrony Bank.

"We are pleased to announce another financial wellness solution available to the employees of our customers through PayPal," said Cory Mau, Paychex vice president of corporate strategy, business development, and investor relations.

The PayPal integration brings Paychex Flex Perks to 25 total employee benefit offerings. The digital marketplace serves businesses using Paychex Flex, the company's cloud-based human capital management platform for small and medium businesses. More than 270,000 customer employees have purchased at least one benefit from the marketplace.

Benefits through Paychex Flex Perks are paid through payroll or directly to benefits providers at no cost to employers. The platform allows employees to self-select additional benefits based on personal needs.

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