Frequently Asked Questions

Q: What is Direct Deposit and how does it work?

A: Direct Deposit is a safe, proven, confidential method of receiving a payment. Money is electronically transferred from a company or organization into a consumer's checking or savings account.

Q: What is the relative cost of Direct Deposit versus checks?

A: The government spends an average of 51 cents more to process a check than an electronic transfer (U.S. Treasury). In fiscal 1999, the government experienced more than $43 million in forged, counterfeited or altered checks. Attempted check fraud at commercial banks has doubled in recent years, exceeding $2.2 billion in 1999, according to the American Banker's Association.

Q: Do I need special software/technology to process Direct Deposit?

A: Many payroll software packages, as well as independent processors, provide a Direct Deposit formatting feature. Check with your company's financial institution or regional ACH association to obtain more information and suggestions on software.

Q: Wouldn't it cost a tremendous amount to convert my company's payroll system to Direct Deposit?

A: No. In fact, Direct Deposit will most likely save your company money in the long run. In addition to savings in printing and postage, Direct Deposit also will save your employees time and ultimately increase productivity.

Q: How will this save my company money?

A: Research shows that companies can save up to $0.60 per payment by using Direct Deposit instead of checks. In addition, your company can gain productivity. Studies show that some employees spend the equivalent of three workdays each year going to the bank.

Q: How do my employees know when their payment has been deposited?

A: Most employers will issue a payment stub that is identical to what is received with a traditional paycheck. It will show how much was deposited in an employee's account and how much was taken out of the pay for taxes, insurance and other items.

Q: If an employee has a problem with Direct Deposit, how do I solve it? Whom should I call?

A: Problems with Direct Deposit are rare. In fact, your employees are much more likely to have a problem with a check. However, if any matter should arise, your employees should contact you or their financial institution. The problem can usually be corrected with one phone call.

Q: Won't I lose the float from my pay period?

A: The savings you will realize from using Direct Deposit far outweigh any savings you now have from check "float." NACHA - The Electronic Payments Association estimates that you can save as much as $0.60 per payment by using Direct Deposit

Q: Is Direct Deposit for everyone?

A: Direct Deposit is an important benefit for companies to offer and for employees to use. As long as an employee has a bank account, Direct Deposit can be an excellent financial planning tool as well as a safe, private, convenient way to receive a payment.

Q: Why is Direct Deposit good for consumers?

A: Direct Deposit is secure, convenient and fast. A payment has never been lost with Direct Deposit. In addition, Direct Deposit saves consumers from waiting in lines, and gives many people access to their money much earlier than check deposits. The satisfaction rate for Direct Deposit is 97 percent.

Q: How many people use Direct Deposit?

A: More than half of Americans (53 percent) use Direct Deposit for their pay. Direct Deposit usage continues to grow. In 2002, nearly 40 million consumers used Direct Deposit for their tax refunds. Ninety-seven percent of Direct Deposit users are very satisfied with it.

Q: Why don't more people use Direct Deposit if it has been around for so long?

A: Some employers do not offer it and some employees just have not thought about it. Direct Deposit usage will increase when companies and employees know more about the substantial benefits.

Q: Is the United States the only country using Direct Deposit?

A: No. In fact, the United States is behind most European countries and some Asian countries in the electronic transfer of money. Nevertheless, we are confident that U.S. companies will catch up soon because Direct Deposit is such a confidential, safe, proven way to transfer money.

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