What is Direct Deposit? | Meaning & Definition | Akrivia HCM

Direct deposit is a bank transfer payment method that electronically moves funds from one account to another. Corporate employees, retirees, and government benefit recipients utilize it promptly to receive their regular income. The attraction of this system, which is often faster than a paper check, has made it a popular payment method among many people.

The Automated Clearing House (ACH) network allows banks to bundle and process multiple transactions. It is made possible because of this technology. Setting up direct deposit for a new employee can take one to two pay cycles. Once it is set up correctly, the time it takes for funds to be transferred and available on the scheduled payday depends on the type of payroll software used and when payroll is submitted.

Benefits of direct deposit

1. Salary payments through direct deposit can save businesses on corporate payroll costs, and they can also be used to prevent check fraud.
2. Providing electronic payments eliminates the risk of lost payments and decreases identity theft from stolen paper checks and billing statements.
3. It decreases the number of paper checks written and stored in filing cabinets.
4. It helps to pay quickly and seamlessly.