Direct Deposit For Workers Without Bank Accounts

When employees without a bank account get paid with a paper check, both sides lose: Companies miss the cost savings of direct deposit, and workers face hefty check-cashing fees.

That's why Crossbow Ventures put $3.4 million last week behind Skylight, a 3-year-old company that provides the technology to do electronic direct deposit to debit cards. Skylight has 10,000 individual customers--many of them lower-income, immigrants, or seniors--who don't have bank accounts and 70 businesses, mostly temp agencies, that want to encourage electronic payment.

Skylight CFO Tom Kuhn estimates at least 25 million Americans don't have bank accounts. Through a partnership with US Bank, the nation's eighth-largest bank, Skylight establishes an FDIC-insured direct deposit account from which people can access cash from ATMs and point-of-sale terminals. Nearly half of its individual customers use Skylight to receive federal benefits such as Social Security.

Beyond saving users the commissions charged by a check-cashing outlet, the system is also a cheaper option for immigrant workers looking to send money home or access funds via ATMs once they've left the country.