General Questions About Direct Deposit
Questions Your Individual Customers Might Ask
Concerns Your Individual Customers Might Have
Questions Your Business Customers Might Ask
Concerns Your Business Customers Might Have
General Questions About Direct DepositWhat is Direct Deposit?Direct Deposit is a simple, safe, and smart way to receive money. Money is electronically transferred from a company or organization's account into an individual'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 individuals to use. As long as an individual 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. Keep in mind that companies of all sizes can benefit from offering 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 countries in transferring money electronically. But, more and more U.S. companies and organizations are offering Direct Deposit because it is a simple, safe, and smart way to transfer money. Questions Your Individual Customers Might AskCan I divide my pay among different accounts if I use Direct Deposit?With Direct Deposit, your individual customers may have the option of splitting the deposit. Advise them to check with the organization issuing the payments. When can I withdraw money from payments deposited to my account using Direct Deposit?Money should be available to your individual customers when you open for business on the date of the deposit. What if my pay date falls on a holiday?If a pay date falls on a holiday or other dates when financial institutions are closed, your individual customers' money will be available on the day before the holiday. How will I know when my payment has been deposited using Direct Deposit?Most companies issue a dated payment stub that is identical to what your individual customers receive with a paper check. This stub will show how much was deposited into their accounts and list the date of the deposit. How will I know how much money in taxes and deductions is withheld from my pay?The dated paper stub issued by most companies will show an itemized list of tax, insurance, and other deductions. I don't want the joint owner of my checking account to know how much I make. How can I participate in Direct Deposit?The best way to keep transactions confidential from a joint account holder is to open another single account. Depending on the company's policy, your individual customers may be able to split deposits among multiple accounts. Advise your customers to check with their employer or the company issuing payments. How do I sign up for Direct Deposit?Your individual customers can sign up with their employers or, for those customers wishing to use Direct Deposit for retirement benefits, with Social Security. What if I want to cancel my Direct Deposit?Your individual customers will need to contact the companies that are sending the Direct Deposit. If your customers wish to cancel the Direct Deposit because of a problem, advise them to let the company know about the problem. They most likely will be able to help your customers directly, so that they can keep using Direct Deposit. What if my company does not offer Direct Deposit? How can I let my employer know that I want it?Advise your customers to alert their employer to the fact that they are interested in being offered Direct Deposit as a benefit. Can my employer require me to use Direct Deposit for payroll?Some states allow companies to mandate Direct Deposit of payroll. Your State Labor Code will have more information. Why did my employer ask for a voided check when I signed up for Direct Deposit?The company uses the financial institution identification number (also known as a routing transit number) as well as the account number that appear on checks to set up the Direct Deposit. The voided check is a way to make sure the information is correct. Does Direct Deposit cost me any money?No. Direct Deposit should not cost your individual customers anything. Concerns Your Individual Customers Might HaveWith Direct Deposit, won't more people have access to my personal account information? Will my employer be able to take money out of my account?No and no. Once your customers sign up for Direct Deposit, the information that they provide simply becomes part of the transfer information read by computers. No one needs to know or refer back to that information, and no one can withdraw money from that account. What happens if my payment goes into someone else's account?That's very unlikely. Should an error occur, however, your individual customers should simply notify the company that sent the payment. What should I do if I have a problem with Direct Deposit?Problems with Direct Deposit are rare because payments are made electronically. If your customers do have a problem, they will need to contact their employer or the company that sent the Direct Deposit. The problem can usually be corrected immediately. How will I be able to keep track of the balance in my account?Your customers should be able to manage their balances via account statements, your automated phone systems, or online. The amount of money I receive is confidential. With Direct Deposit, can I be sure my privacy is protected?Yes. In fact, the privacy of your individual customers will increase with Direct Deposit. Once Direct Deposit has been authorized, computers are processing the payments - not people. Multiple levels of security are in place to protect the payment as it passes electronically through the banking system. What if my deposit isn't in my account on the pay date?It's very rare that deposits wouldn't post to individual accounts on the scheduled pay date. If it does not, advise your customer to contact the organization that sent the payment. Questions Your Business Customers Might AskHow can I be sure that my employees, stockholders and retirees really want Direct Deposit?Direct Deposit is a simple, safe, and smart way for a company's employees, stockholders and retirees to receive payments, offering many benefits to them. 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 companies and organizations money in the long run. Regardless of whether check preparation is outsourced or handled internally, most companies more than recoup their Direct Deposit start-up costs in savings and increased productivity in the first year of use. Companies and organizations 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 most independent processors, provide a Direct Deposit feature. Your treasury specialist will have information on software requirements for your business customers. 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 Your Business Customers Might HaveIf 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 your customers cannot resolve, invite them to talk to you. 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 associated with payroll by more than 50% a year. Also, keep in mind that 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 your customer has 10, 100 or 100,000 employees, shareholders or retirees, Direct Deposit will streamline a 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 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. |
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