General Questions About Direct Deposit
Getting Started With Direct Deposit
Concerns About Direct Deposit
General Questions About Direct DepositWhat is Direct Deposit?Direct Deposit is a safe, proven, confidential method of making a payment. Money is electronically transferred from a company or organization's account into a consumer's checking or savings account, without the need for paper checks. Is Direct Deposit for everyone?Direct Deposit is an important benefit for companies and organizations to offer and for consumers to use. As long as a consumer has a bank account, Direct Deposit can be an excellent financial planning tool as well as a safe, private, convenient way to make and receive payments. How many people use Direct Deposit?Three out of four Americans who have Direct Deposit available for their pay use it, and usage continues to grow. Most large businesses (over 500 employees) offer Direct Deposit as a benefit to their employees. Is the United States the only country using Direct Deposit?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. What if an employee does not have a bank account?You can set up a payroll card program for employees that do not have bank accounts. A payroll card is loaded by Direct Deposit. Employees can access their money using this card as an ATM or debit card. Talk to your payroll provider or financial institution about this option. Getting Started With Direct DepositHow can I be sure that my employees, stockholders and retirees really want Direct Deposit?Direct Deposit is a secure, convenient and fast way for your employees, stockholders and retirees to receive payments, offering many benefits to them. Payments are never lost with Direct Deposit. It saves your employees the time spent waiting in lines and gives many people access to their money much earlier than check deposits. For these reasons, Direct Deposit is very popular with consumers. Won't it cost a lot of money to convert my company's current system to Direct Deposit?No. In fact Direct Deposit will most likely save your company or organization money in the long run. Regardless of whether you outsource 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. Your company or organization should also realize reductions in printing, postage, and error resolution costs. Do I need special software/technology to process Direct Deposit?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. Can my company mandate the use of Direct Deposit for payroll?Some states do allow companies to mandate Direct Deposit of payroll. To find out the rules in your state, contact your state's labor department. How do employees know when their pay has been deposited?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. Concerns About Direct DepositIf there is a problem with a Direct Deposit, how do I solve it?Problems with Direct Deposit are rare, because payments are made electronically. But if any matter should arise that you cannot resolve, contact your financial institution for assistance. Concerned employees may verify their deposit by calling their financial institution or checking their account online. Won't my company lose the float we get with check payments?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 by more than 50% a year. And with the recent increase in the use of check conversion, check ÒfloatÓ is quickly becoming a thing of the past. Isn't my company or organization too small to offer Direct Deposit?Direct Deposit is appropriate for a company of any size. Whether you have 10, 100 or 100,000 employees, shareholders or retirees, Direct Deposit will streamline your company's payment processing operations and save time and money. What is the risk of fraud with Direct Deposit?Using Direct Deposit prevents criminals from altering or counterfeiting payroll checks. It also reduces the risk of criminals obtaining your employees' account numbers. 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. |
|
