"I believe approximately 1/2 of private sector employees are employed by small businesses. I would imagine that most small businesses do not use direct deposit for their employees"

My exposure mainly is to the businesses using QuickBooks, and nearly all of them do online/electronic payroll (inhouse or by their CPA). I taught payroll as a separate class for 8 years. The businesses would be considered small, even though there might be more than one location (one coffee/cafe company has 9 locations). If you consider that a small employer might have 5-50 staff, and a large employer might have 4,000-12,000, then I would not doubt those numbers based on staff, not on companies.

It's not for the same reason, but is the same process for one of my clients who runs an HOA with nearly 500 accounts. Everything is split into ACH batches, so even though they have monthly fees, they process different neighborhoods on different weeks.

Fraud avoidance is another reason. Nothing that is done by paper is securable. It's been 15 years since I ran payroll for an employer, and I'd been doing it by ACH template through the bank login since about 2002. You get a little dongle that is a random security code generator.

And a big impetus to change over to ACH/EFT/direct deposit is the "get your money now" services which allow paydays to be based on shift end. Gig workers get this, as "instant cashout."