Direct Payment FAQs For Individuals

Frequently Asked Questions about Direct Payment via ACH

Here are some of the most common questions people ask about Direct Payment via ACH. Click on a question below to view the answers.

General Questions About Direct Payment

Do I need a computer or Internet access to use Direct Payment via ACH?

No. You can set up many bills to be paid by Direct Payment via ACH on a recurring, automatic basis via mail or telephone and you do not need to go online.

Are there other names for Direct Payment via ACH?

Yes. Companies may refer to Direct Payment via ACH by terms such as automatic bill payment, automatic debit, electronic bill payment, e-check, or direct debit. Some use special brand names to refer to a payment option that uses Direct Payment via ACH for the transaction.

Is Direct Payment via ACH safe?

Yes. Your transactions are safe and confidential since money transferred electronically passes through fewer hands than a paper check. Also, federal regulations and banking rules provide consumers with protection regarding electronic payments.

How many people use Direct Payment via ACH?

Direct Payment via ACH is used by many people, and in different ways. Billions of payments are made annually using Direct Payment via ACH, for payments as diverse as mortgage and bill payments, charitable donations and investment fund contributions.

How do I cancel Direct Payment via ACH?

If you have enrolled in Direct Payment via ACH by authorizing the company you pay to withdraw funds from your account on a recurring basis, the authorization form should have provided information on how to revoke authorization and discontinue the automatic withdrawals. You can also contact the billing company or check its website for instructions or a new form. If you are using your bank or credit union’s online banking service, contact your financial institution.

What types of companies and organizations offer Direct Payment via ACH?

Many companies and government agencies offer Direct Payment via ACH to consumers for loan, subscription, insurance, utility, tax, and other bill payments, or to make charitable donations or fund investment accounts.

What is Direct Payment via ACH?

Direct Payment via ACH is the electronic transfer of funds for making a payment. Its flexibility allows you to control how and when you pay, depending on the bill that needs to be paid. You can initiate a payment using a bank or credit union’s online bill payment service or authorize a company or government agency to initiate the payment. For example, you might enroll to pay certain bills by Direct Payment via ACH on a recurring basis, typically monthly. You may pay other bills by logging in to those billers’ websites each month, authorizing a payment through a telephone call, or using your mobile device. In addition, you might pay some of your bills through your bank or credit union’s online banking service. In all cases, the funds are withdrawn from your checking or savings account and transferred electronically by Direct Payment via ACH to pay the bill.

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Getting Started With Direct Payment

Does Direct Payment via ACH cost me money?

Typically, there is no fee for using Direct Payment via ACH, particularly for recurring payments that you pre-authorize, or for authorizing a company to initiate a Direct Payment via ACH to pay a bill. Although many banks and credit unions do not charge a fee for using their online bill payment services, this could vary. Some government agencies, electronic tax filing and other service providers might charge a convenience fee for all payment types. Direct Payment via ACH can save you money in postage, checks and even late fees.

What if my payment date falls on a holiday?

If you have authorized a company to initiate a Direct Payment via ACH transaction to withdraw funds from your account to pay a bill on a one-time or recurring basis, the funds are typically withdrawn the business day following the holiday. If you are using your bank or credit union’s online banking service to pay a bill using Direct Payment via ACH, the funds might be withdrawn the business day before the holiday to ensure the payment is received by the due date. Contact your bank or credit union for additional information regarding its service.

Will I still get a monthly bill from the companies?

Ask the company directly. Increasingly, companies are encouraging consumers to switch to paperless electronic billing as a greener option, particularly if they are using Direct Payment via ACH.

How will I know when the payment is withdrawn from my account?

You set the scheduled payment date when you sign up, make it on your online bill payment service, or authorize it on a company’s website. If the payment date varies, the company is required to send a written notice seven days before the payment date. If the date falls on a federal holiday, the money will be withdrawn on the next business day.

How will I know how much will be withdrawn from my account for each payment?

Some bills, such as your automobile loan, are a fixed amount for each payment. Other bills, such as an electricity or telephone bill, may vary. If the dollar amount varies from the previously paid amount or the amount that you preauthorized, typically you will receive a written notice at least 10 days before the payment date. The company you are paying may not notify you if you agreed to forego the notice when the amount falls within a specific range. When authorizing a one-time payment by Direct Payment via ACH, such as paying your credit card bill on the card issuer’s website, you typically will receive an e-mail notifying you that a payment has been authorized for a certain amount. You determine the amount to pay when using your bank or credit union’s online bill payment service.

How do I sign up for Direct Payment via ACH?

Signing up is easy. Check your monthly bills or statements for directions to sign up, or contact the companies that send you bills and tell them that you want to sign up for Direct Payment via ACH. Companies and government agencies typically either have authorization forms for you to complete, sign, and return or offer that capability online. Contact your bank or credit union for information regarding its online bill payment service.

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Using Direct Payment

Is my personal account information safe?

Yes. Once you have authorized the Direct Payment via ACH, the transaction is processed electronically. That means fewer people see your information, and multiple levels of security are in place to protect your information.

What prevents a billing company from accessing my account whenever it wants to?

Federal consumer protection regulations and banking rules protect you from unauthorized debits from your checking or savings account and provide recourse. Contact your financial institution for assistance immediately should a transaction that you did not authorize post to your account.

What should I do if I think an unauthorized debit has been made to my account?

Contact your financial institution and the company that was paid. Federal consumer protection regulation and banking rules protect you from unauthorized debits from your checking or savings account and provide recourse. Your bank or credit union will advise you of its procedures and the specific actions to resolve the problem. In most cases, any error can be resolved quickly.

What if the wrong amount of money is taken from my account?

Problems with Direct Payment via ACH are rare and generally easy to correct. If the wrong amount is withdrawn from your account, notify yourbank or credit union. Your account is protected against unauthorized debits under federal regulations and banking rules.

What if I don't have enough money in my account when a payment is posted to my account?

Just as when you write a check, you are obligated to have sufficient funds in your account to fund a transaction made using Direct Payment via ACH. If you do not have enough money in your account, your financial institution may return the payment due to insufficient funds, and you may be charged extra fees by your bank or credit union, and the company you need to pay.

What if I have a problem?

Problems with Direct Payment via ACH are rare and can usually be corrected quickly. If you do have a problem, notify the company you paid if you authorized the company to withdraw funds from your account to pay a bill. Contact your bank or credit union if the Direct Payment was made through its online bill payment service.

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