Direct Deposit Advantges

Companies who take advantage of ACH transaction for direct deposit to meet payroll needs are provided many advantages over traditional methods:

  • Paper check purchasing is eliminated.
  • Re-issuing lost paper checks becomes a non-issue.
  • Automation of recurring amounts  for on-going transactions is easy to accomplish.
  • Reconciliation time of checks cashed late is eliminated.
  • Scheduling of future payroll checks is easily accomplished.
  • Envelop purchases are reduced to zero for the purpose of payroll.
  • Risk of bank account data being used for fraudulent purposes is significantly reduced.

Employee records

When utilizing ACH direct deposit, employees can still receive a record of their deposit. However, with ACH direct deposit this can be in the form of an electronic notification. They can still receive gross amounts, net amounts and any withholding’s for the pay period. Integration of direct deposit can also make available a web look-up utility for self-servicing the employees in viewing current, scheduled or past payroll transactions. Whatever can be done by traditional payroll methods can be done using direct deposit via ACH/EFT, only more efficiently and with less costs to the company.

Dealing with employee objections to direct deposit

While the trend today is away from traditional payroll checks, some employees still prefer to have a paper check instead of having their funds deposited into their account. Some times this comes out of fear that the company has their bank account information. While it is true that the company does need this information to initially setup direct deposit, it does not mean that the data needs to be stored on their computer systems. Advanced ACH processors utilize data replacement technologies like tokenization. What tokenization does is replace bank account data with a reference token, where future transactions take place by sending the token which is then called by the ACH Processor to retieve the sensitive data, ideally under a PCI compliant processing system. A good provider of direct deposit payroll should also be able to provide employee information materials that assist in the conversion towards direct deposit payroll.


While there are many PC software solutions available for direct deposit, very few of these software programs are PCI compliant. If a company prefers PC resident software, they should demand that it is certified as being PCI compliant. The risk of bank account data theft is simply a risk that a company doesn’t want to deal with. An option to PC resident software might be a web application that is designed to perform direct deposit. It is much easier to maintain PC compiance of a web application that is housed on a payment processor’s secure servers. Using one of these web applications assures the company that no data is ever entered or stored on their systems.

If your company required more information on direct deposit, contact a reputable ach payments provider.

About Gene

Gene is a 24 year veteran of the electronic payments industry and has consulted with countless companies of all sizes. He has overseen large underwriting portfolios, directed IT staff, and currently serves as the Director of Business Development. Gene has appeared before the U.S. Congress to provide expert opinions regarding developing technology and transaction risks towards solutions for the payroll industry. You can find him on LinkedIn>.

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