ACH Direct: Frequently Asked Questions
What is Direct Deposit?
Direct Deposit is a safe, proven, confidential method of receiving a payment. Money is electronically transferred from a company or organization into an employee's checking or savings account.
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Why is the concept of Direct Deposit good for employees?
Direct Deposit is secure, convenient and fast. Payments made by Direct Deposit have never been lost. Direct Deposit saves employees from waiting in lines at the bank, and it gives many people access to their money one to four days earlier than a check. According to the National Automated Clearing House Association (NACHA), The satisfaction rate for direct deposit is 97 percent.
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How do employees know when their payment has been deposited?
Most employers will issue a payment stub that is identical to what an employee would receive with a traditional paycheck. It will show how much was deposited in their account and how much was taken out of their pay for taxes, insurance and other items. If the employer does not issue payment stubs, the employee's bank will notify them within two days of receiving the Direct Deposit or will provide them with a telephone number to use to check the status of their deposits.
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When do employees have access to the money?
Typically, their payment is available first thing in the morning on payday. If their payday happens to fall on a holiday, the payment will be available the day before payday.
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If employees sign up for Direct Deposit, how can they be sure that no one will have access to their account?
Direct Deposit is a confidential way to send and receive payments. Although the company does have a limited ability to reverse your Direct Deposit payment, it can only access funds that were deposited in error, generally when the company has issued the transaction twice or issued a deposit in the wrong amount. On average, fewer people see the account information with Direct Deposit than with checks.
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Can employees divide their pay among different accounts?
Yes. Employees can have their pay deposited into one account or split among several accounts. This financial flexibility is one of Direct Deposit's best features and ACH Direct is designed to take advantage of this benefit. Employees decide how they want their pay divided and ACH Direct carries out their request automatically every pay period.
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We need the file to be in NACHA format. Will ACH Direct be compatible?
Yes. The file produced by ACH Direct is guaranteed to meet National Automated Clearing House Association (NACHA) standards. Click here to learn more about ACH Direct compliance with ACH record formats specified by NACHA (PDF file).
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Not all of our employees will be switching to Direct Deposit. Can we set it up only for the employees who want to do Direct Deposit?
Yes. You can easily indicate which employees desire Direct Deposit and only the pay data for those employees will be included in the transmission file.
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Will ACH Direct work with my bank?
Yes, as long as your bank or financial institution conforms to National Automated Clearing House Association (NACHA) standards. Most banks use the NACHA standards. In fact, we have never come across a potential customer who couldn't use ACH Direct because it wouldn't work with their bank.
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How do we transmit the file?
ACH Direct provides several options for getting the file to your financial institution. The most common transmission method is via Internet connection to your bank. The file is transmitted electronically right from your desktop to the bank that will be processing it and sending payments on to employees' accounts at other banks. You can also choose to put the file on a CD and/or create a printed report.
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Learn more about ACH Direct.
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