Resource Center

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

No. In fact Direct Deposit will most likely save your company or organization money in the long run. Regardless of whether you out-source check preparation or handle it internally, most companies more than recoup their Direct Deposit start-up costs in savings and increased productivity in the first year of use. Studies show that some employees spend the equivalent of three workdays each year cashing their paychecks. Your company or organization should also realize reductions in printing and postage costs.

Many payroll software packages, as well as independent processors, provide a Direct Deposit feature. You can also check with your company or organization’s financial institution to obtain more information on software requirements.

Some states do allow companies to mandate Direct Deposit of payroll, but not all. To find out the rules in your state, contact your state's labor department. Other Direct Deposit applications do not have mandate restrictions, but your company will have to take into consideration the fact that not everyone has a bank account.

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

You can contact us directly and/or your or your employee's financial institution with any matters relative to your direct deposit transactions. Direct Deposit transactions can easily be traced. There has never been a "lost" ACH transaction. Concerned employees may verify their deposit by calling their financial institution or checking their account online.

Direct Deposit is a much greater asset than check "float". The savings from Direct Deposit can add much more to your company's bottom line. In addition, your company may reduce its administrative costs significantly.

Direct Deposit is an important benefit for companies and organizations to offer and for consumers to use. As long as an employee or consumer 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.

There is no way to assure that everyone will want to use Direct Deposit, but it is a secure, convenient and fast way to receive a payment. A payment has never been lost with Direct Deposit. Plus, Direct Deposit saves employees and consumers from waiting in lines, and gives many people access to their money much earlier than check deposits. For these reasons, Direct Deposit is a very popular with consumers.

No. In fact, the United States is behind most European countries and some Asian countries in the electronic transfer of money. But, more and more U.S. companies and organizations are offering Direct Deposit because it is a confidential, safe, and proven way to transfer money.

Direct Deposit is appropriate for a company of any size. Whether you have five, 10 or 100,000 employees, shareholders or retirees, Direct Deposit will streamline your company's check processing operations and save time and money.

An article released by the Institute of Management and Administration states, "One of the easiest ways to prevent check fraud is not to issue checks at all. The reason Direct Deposit is critical is often the checks that are forged are payroll checks." And, check fraud is growing at alarming rates. The National Check Fraud Center reports that check fraud and counterfeiting are producing estimated annual losses of $10 billion.

Using Direct Deposit prevents criminals from altering or counterfeiting payroll checks. It also reduces the risk of criminals obtaining your account number. In an article in the Journal of Accountancy, Joseph T. Wells, founder and chairman of the Association of Certified Fraud Examiners, states that Direct Deposit "can cut down payroll chicanery by eliminating paper paychecks and the possibility of alteration, forgery and most theft."

Direct Payment is the safe and accurate electronic transfer, initiated by your company, of an authorized payment from your customers' or donors' checking or savings account into your account.

More and more companies now offer Direct Payment to manage recurring payments of all sizes, from mortgage, insurance, and automobile financing payments, to monthly utilities, magazine subscriptions, and health club memberships.

Businesses of any size can benefit, and should be offering Direct Payment for many reasons, including the fact that consumers are expecting it as a payment option.

As with any new system you put in place at your company, there will be initial costs to set up Direct Payment. These costs will seem small once you start realizing the cost savings of Direct Payment - an average of 11.5 cents per payment (versus checks) due to reduced processing costs.

Many of your customers want Direct Payment because it will simplify their lives and take the hassle out of paying bills. In fact, in 2004, 54% of households already used Direct Payment for at least one payment, and the number of Direct Payments increased from 2.8 billion payments in 2003 to 3.0 billion payments in 2004, a 6.7% increase. Research also confirms that consumers who use Direct Deposit to receive their pay or benefits are more likely to sign up for Direct Payment.

Check conversion is the process of converting a consumer check payment into an electronic payment.

• The billing company notifies the consumer that it is using the check conversion process, usually with a notification on the bill or with an enclosure in the bill.

• The consumer writes a check to a billing company (i.e., credit card issuer, utility company, etc.) for the amount of the payment. The billing company converts the paper check into an electronic payment, makes a copy of the check, destroys the original check and stores an image of the check.

• The company billing the consumer instructs its financial institution to debit the consumer's account for the amount of the check. The company itself has no access to a consumer account. The payment is automatically withdrawn from the consumer bank or credit union account. This payment is easy to track because it shows up on the bank or credit union statement with the date of the payment, the name of the billing company, the check number, and the amount of the payment.

• The consumer's account statement may show the transaction as an Electronic Funds Transfer (EFT), similar to or categorized with the ATM withdrawals, Direct Payments, other electronic payments or remain with in the check listing. The bank or credit union statement lists the date of the payment, the name of the billing company, the check number, and the amount of the payment. The information on the bank or credit union statement is generally proof of payment.

• Converting checks to electronic transactions results in savings to the U.S. economy, including companies and consumers. Electronic transactions can result in fewer bad checks, earlier fraud detection, fewer errors, more privacy and reduced check processing costs.

• Consumers who experience check conversion have greater protection under the Electronic Funds Transfer Act of 1978, known as Federal Regulation E.

• Checks are converted into electronic transaction and the transaction is completed via the Automated Clearing House (ACH) network, the same safe, reliable system used by millions of companies and consumers for Direct Deposit of payroll and by the Federal government for benefit payments such as Social Security. The ACH system is a closed, private network that is not accessible to the general public and is not part of the Internet. It is an extremely safe network that has been in existence for over 30 years.

No. Check conversion has been in place for five years using the same secure Automated Clearing House (ACH) system that the Federal Reserve and the nation's financial institutions use to process electronic payments The ACH is also the network that has been used for over 30 years for Direct Deposit and Direct Payment. At present, check conversion is for consumer payments only.

Converted checks have a unique identifier code, called a standard entry class code that distinguishes them from other ACH transactions. Accounts Receivable Entry (ARC) is the standard entry class code for check conversion.

Converting checks into electronic transactions saves money for the U.S. economy, consumers, billing companies and financial institutions. Electronic transactions can result in fewer bad checks, earlier fraud detection, fewer errors, more privacy and reduced processing costs.

Check conversion also provides easier recordkeeping for consumers because the name of the billing company, the date of the payment, the check number, and amount of the payment is listed on account statements.

Everyone benefits - consumers, companies and the U.S. economy. No other industrialized nation relies on paper checks as much as the United States. The technological advances and advantages in electronic payment processing are advanced to the point that the processing is seamless and for the most part transparent and beneficial to the consumer and company alike.

Check conversion is an increasingly common process of converting paper checks to electronic payments. NACHA estimates that check conversion transactions increased by more than 700 percent from 2002 to 2003.

For more information, see www.checkconversioneducation.org.

Check conversion may also be called Accounts Receivable Entry (ARC), electronic check, e-check, electronic check processing, and ACH.

The Federal Reserve estimated that the U.S. economy saves $1.62 per ACH transaction vs. a check in direct and indirect costs. ACH use in 2000 saved the U.S. economy - consumers, companies, organizations and the government - an estimated $8.4 billion.

The Federal Reserve's Regulation E and the ACH operating rules regulate electronic payments. Because of Reg E and NACHA's operating rules, consumers have greater protection with check conversion.

Check conversion, one of several methods of electronic payment, is completely legal.

Yes. Electronic payments are safe and private - a network of computers does the work.