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Direct Deposit - Complete Guide

A comprehensive guide to setting up, processing, and transmitting direct deposits in ProPay.

Overview

Direct deposit enables you to pay employees by electronically transferring wages directly into their bank accounts through the ACH (Automated Clearing House) system. This secure and efficient payment method eliminates the need for paper checks and ensures timely payment delivery.

ProPay creates NACHA-compatible files that you transmit to your ACH processor or financial institution, which handles the actual fund transfers between employer and employee bank accounts.

Benefits of Direct Deposits

  • Eliminates paper checks - No more printing, signing, or distributing checks
  • Ensures timely payment - Funds are deposited directly on pay date
  • Reduces costs - Lower costs than check printing and processing
  • Increases security - Eliminates lost or stolen checks
  • Improves efficiency - Automated process reduces manual handling

How Direct Deposits Work in ProPay

  1. One-time setup - Configure system settings and ACH processor information
  2. Employee setup - Enter bank account information for each employee
  3. Payroll processing - Direct deposit transactions are created automatically during check printing
  4. File generation - Export a NACHA-compatible ACH file
  5. Transmission - Upload the file to your ACH processor or bank
  6. Settlement - Funds are transferred on the specified settlement date

Requirements

System Requirements

Before you can process direct deposits, you must have:

  • ProPay direct deposits enabled - In Employer > Employer Setup > Screen 4
  • ACH processor agreement - Active agreement with a financial institution or ACH processor
  • Bank clearing account - Account that handles direct deposit debits and credits
  • System configuration - Direct deposits setup completed in ProPay

Information Needed

To set up and process direct deposits, you need:

From your ACH processor:

  • ACH processor name and contact information
  • Bank routing number (9 digits)
  • Bank account number for clearing account
  • File format requirements (usually standard NACHA format)
  • Originator ID requirements
  • Settlement timing requirements

From each employee:

  • Signed authorization form
  • Voided check from their bank account
  • Bank routing number (9 digits from check)
  • Account number (from check)
  • Account type (checking or savings)

Legal requirements:

  • Written agreement between employer and payroll processor
  • Employee authorization forms on file
  • ACH agreement with financial institution

Topics

Setup

Processing

Transmitting

Pre-notes

Converting to Checks

Risk Management

Re-exporting

Troubleshooting

Best Practices

Related Topics

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