Here’s how the direct deposit process works:Īn employer starts by collecting the banking information-including bank account number and bank routing number-of its employees and vendors. Since direct deposit occurs automatically, it is more convenient for the employee, who can count on their paycheck arriving on payday without having to lift a finger, and more economical for the employer, who does not have to spend money to print and distribute paper checks.
workers receiving their paychecks via direct deposit, according to the American Payroll Association’s 2020 Getting Paid in America Survey.
This payment method has become very common in recent years, with nearly 94% of U.S. There is no need for a physical check or for either party to visit the bank for the money to transfer. When receiving a direct deposit, the payer issues an electronic payment that is automatically transferred into the payee’s checking account. Direct deposit is a fully automated method of handling transactions.
