Pinwheel Debuts Tool to Increase Direct Deposit Use

Income and employment data platform Pinwheel is upgrading its direct deposit offering.

The company announced in a Monday (March 20) press release the launch of Deposit Switch 2.0, which it said will let consumers update their deposit settings to receive direct deposits, whether they’re a full-time employee, gig worker, or receive Social Security or unemployment benefits.

“The most important part of a person’s financial life is their income — whether they earn a biweekly salary, receive irregular gig-work payments, get pension or unemployment benefits, or any type of income in between — all consumers need a way to seamlessly connect their direct deposits to their financial providers of choice,” Pinwheel said in the release.

For gig workers, payment choice is an important feature when choosing employers, as PYMNTS and Onbe found in the “Expanding Payments Choice Playbook.”

Companies that speed their digital transformation, change how they handle independent worker payroll and provide more flexible payments will have a recruitment advantage, the report said.

Pinwheel said in the release the initial version of Deposit Switch helped financial service providers grow their deposits, explaining customers who use direct deposit have a higher lifetime value for banks than those who don’t.

“DDS 2.0 enables every user to utilize the direct deposit switching user experience to drive maximum conversion through Pinwheel’s intelligent case detection, regardless of how they receive their paycheck,” the release said. “Deposit-switching solutions must accommodate all income profile types to deliver maximum value.”

The launch comes as consumers and businesses alike face increased pressure due to what PYMNTS calls a “butterfly effect” stemming from the recent banking crisis.

That crisis means lending activity will likely become muted, underwriting will become tighter, and loans that are extended will be more expensive.

“That means everything from credit card debt to mortgages to car loans will pinch household budgets even more,” PYMNTS wrote. “And that’s without any additional interest rate hikes from the Federal Reserve.”

If the Fed raises interest rates this week, the combination of that move and caution by banks will bring immediate pressure to paycheck-to-paycheck consumers.

As research by PYMNTS shows, these consumers are already finding it a burden as they grapple with credit cards.

Consumers with issues paying their monthly bills, on average, carry balances of 157% of their available savings. Close to 40% of consumers living paycheck to paycheck with issues paying bills have already withdrawn money from their savings or investments to help manage their credit card bills.