With billions of electronic deposits taking place each year and now, in light of the COVID-19 pandemic, a general shift away from cash, direct deposits are the norm when it comes to receiving your paycheck. But what exactly does direct deposit mean and how does it work? We’ve broken down everything you need to know about direct deposits, and why you should consider making the switch if you’re still receiving paper checks. ‍

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1. What is a direct deposit? A direct deposit is an electronic payment that is transferred directly from a payer’s bank account to a payee’s bank account. In the case of your paycheck, this means from an employer’s account to an employee’s account. No need for physical paper checks and the trips or fees to cash them! 

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2. How does the direct deposit process work? Direct deposit transfers go through the Automated Clearing House network, often referred to as the ACH network. The ACH network is used by banks to coordinate payments between different financial institutions. 

Direct deposits will automatically hit your bank account without any action required on your end. Unlike a cash or paper check, you do not need to take any additional steps to accept the funds. ‍

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3. When will I receive my paycheck through direct deposit? One of the biggest benefits of direct deposit is that it allows you to receive your paycheck quicker. At Branch we do not hold on to your deposit,  but process and post deposits as soon as we receive them. That means you can receive your paycheck faster than a typical bank account or paper check, with your paycheck hitting your account up to 2 days earlier than usual.

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Because we post your deposit in your account as soon as we receive it, you may notice that you receive your deposits at different times each week. When you receive your payment depends on when your employer sends it, which can possibly vary from week to week. Once your employer sends it, it must pass through your employer’s bank and the Federal Reserve Bank before it reaches Branch. 

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4. So… should I switch to direct deposit? There are a lot of benefits to switching to direct deposit, in addition to the many that you’ve already read in this article. With direct deposit, you can be sure you are receiving your paycheck as fast as possible. You will no longer have to cash or deposit your paycheck; it will just automatically be posted in your bank account, making receiving your wages a lot more convenient. 

Another benefit -- additional security. Direct deposit is much more secure than a paper check. Because your payment is delivered digitally, nobody can attempt to steal or alter it. Direct deposit also saves money from printing and mailing paper checks. By using the Branch Digital Wallet for direct deposits, you’ll be able to see and track all of your direct deposits the moment they hit. Branch is also regularly adding more benefits for users who add their direct deposits.

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5. Does it matter what type of bank account I put my direct deposit? Yes, it does matter! Not all bank accounts are created equal, as some charge for monthly maintenance, overdrafts, and other unnecessary fees. Look for an account (like the Branch Digital Wallet) that not only delivers your direct deposits faster, but also allows you to save on the fees. Plus, get other benefits like access to a portion your paycheck before it hits for unexpected expenses and an Auto-Budgeting tool to understand where your money’s going.

To learn more about setting up or switching your direct deposit onto the Branch Digital Wallet, click here.