Finance & Economics

Direct deposit: how to work with it

The guide on how to use direct deposit


Direct deposit: how to work with it. Source:

In the previous article, we’ve considered a direct deposit and gave you a definition of it. If you have no idea what direct deposit is and haven’t read our previous article about it, then we recommend you to read that one. It might help you to understand how direct deposit works and define it. However, if you already know what direct deposit (and an ACH payment) is, then allow us to cut to the chase.

Today, PaySpace Magazine has decided to consider direct deposit as well, the only difference is that we would like to describe how to work with direct deposit and how to set one up. Because sometimes knowing the definition of something (direct deposit, in our case) and how it works is not enough. Therefore, after reading this article, you will know how to set up a direct deposit, whether it is possible to send payments, and in which areas you can use this payment option (obviously, it’s not only about paying/receiving wages).

How to set up direct deposit in order to receive payments?

So, let’s imagine you have a need for receiving payments in electronic form. The first thing you’ll have to do is to provide bank account data to the company you are working for (to be precise, to the one that pays you). They may require that you use a particular form (such as a direct deposit form) or you may be able to just provide a voided cheque. In some cases, you’ll be required to provide your account data online.


The first thing you’ll have to do is to provide bank account data. Source:

So, here’s the bank account data we are talking about:

  1. Bank account number
  2. Routing number/Sort Code
  3. Type of account (most probably it will be a chequing account)
  4. Bank name and address. Here, it is possible to use any branch of the bank or financial institution you use
  5. Name(s) of account holders listed on the account

In 2019, it is easy to find this info. You can opt for calling your bank, but most banks try to make such data available online nowadays. If you want to make sure your data is accurate, you can log in to your account. If you know better options, then you are free to use any one of them (in other words, the one that you prefer).

Setting up a direct deposit can take some time (usually between a few days and a few weeks). Stay tuned, and ask your employer what to expect. It will help you to avoid looking for your payments in the wrong place.

At this point, if you’ve set up all the required things and have done everything right, every single payment (intended for you) will go straight to your bank account automatically. But here’s one nuance, there is such a thing as available balance in a bank/chequing account. We believe there is no sense in focussing on it, because it is not something we wish to dwell on, so we’ll not dedicate it a separate article. However, make sure you’ve checked this very “available balance”. Otherwise, it can make trouble for you, and you can end up in an unfortunate situation. The only type of payment that is available instantly: Government payment(s) (tax refunds/Social Security benefits etc). Most other types of payments can be available in a couple of days. You might have heard that wages (or any other employers’ payments) usually can be available instantly, and that’s partially correct, but you should always be careful and attentive when it comes to electronic payments (especially direct deposits, AСН payments, and all related things). The rules have exceptions, and you can never predict whether account incomes are available or not.

Sending payments


This kind of payment can be used not just for paying salaries. Source:

Let’s imagine you’ve decided that you may need to send payments electronically. In this case, you will need to accomplish some steps. First of all, it is obligatory to have a connection with a bank/financial institution that can provide the АСH payment option. The next step is to compile information on the person who will receive your payment. It might be more important than you think, so you’ll have to double-check any disclosure relating to local/federal laws and whatnot. In case you are not sure about the laws/regulations, or you feel that you have gaps in legislation-related issues, then check this info with your accountant (if you have one), or request the support of relevant (outside) experts in this field.

Direct deposit in different areas

When we hear “direct deposit”, the first thing that pops to mind is “salary, wages, job, employee, employer, etc.” (well, actually it is eventually not just one thing, but we have implied work/job-related things including a process of salary payment). In fact, this kind of payment can be used not just for paying salaries. Let’s consider in which cases direct deposit can be used, and where most of such cases where registered:

  • Independent contractors
  • Social Security Benefits
  • Child support and maintenance
  • Tax refunds


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