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Myths vs. Realities of Direct Deposit

March 27, 2000
Related Topics: Compensation Design and Communication, Featured Article
The No. 1 reason why employees who have access to Direct Deposit choose not to use it is a perceived lack of reliability. Specifically, concerns about not knowing when or how much money is deposited and worries of mistakes make them skeptical.

In an effort to increase the use of Direct Deposit, the Direct Deposit and Direct Payment Coalition identifies three common misperceptions that may be holding your employees back from signing up for Direct Deposit and offers this information to share with your employees.

Myth: If I have a problem with Direct Deposit, it is going to be more difficult to rectify than with a traditional paycheck.

Reality: Problems with Direct Deposit are rare. In fact, you are much more likely to have a problem with a check. But if any matter should arise, all you need to do is contact your employer or financial institution. The problem can usually be corrected immediately.

Myth: With Direct Deposit, more people will have access to my personal account information, and my employer will be able to take money out of my account.

Reality: Direct Deposit is a very confidential way to send and receive payments of all kinds. Although your company does have a limited ability to reverse your Direct Deposit payment to correct erroneous deposits or wrong amounts, it cannot access any other funds in your account. On average, fewer people see your account information with Direct Deposit than with checks.

Myth: I will not know when my payment has been deposited or the amount that was withheld from my paycheck if I use Direct Deposit.

Reality: Most employers issue a payment stub that is identical to what you receive with a traditional paycheck. It will show how much was deposited in your account and how much was taken out of your pay for taxes, insurance and other items.


SOURCE: The Direct Deposit and Direct Payment Coalition, March 2000. The coalition was formed to promote the benefits of Direct Deposit and Direct Payment to consumers, companies and the country. The coalition, composed of the Federal Reserve, NACHA: The Electronic Payments Association and regional ACH associations, sees Direct Deposit and Direct Payment as leaders in a system that is moving quickly to electronic payments of all kinds.

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