How does Direct Deposit work?

The Payer (employer, government agency, or payroll provider) requires the Payee's bank account information (account and routing number, bank name) or a voided check to make a Direct Deposit into the Payee's account.

If you enroll in Direct Deposit, your Payer’s bank may try to verify your account using micro entries before initiating a deposit for security reasons. You may see two small credits, typically less than $1, and one offsetting debit entry denoted with an ACCTVERIFY description in your PayPal Balance account transaction history. You may be asked to manually enter these amounts on the Payer’s website.

Here’s how to access your transaction history:

• Go to your Activity.
• Select or search for your payment. You can also click Filters to narrow your search by status or transaction type.

Once Direct Deposit is established, the Payer issues an electronic payment to the Payee that is automatically transferred into the Payee's PayPal Balance account. The network used is called the Automated Clearing House (ACH). The ACH organizes the payment instructions and makes sure that payments are made to the correct banks and accounts. Unlike other deposits, there’s no need to wait for the money to clear.

Typically, up to 5 business days prior, the Payer (employer, government agency, or payroll provider) sends its payment instructions to its financial institution, which passes that information to the ACH. The ACH sorts the entries and ensures that each instruction is routed to the correct bank account for each payment. Then, the ACH transfers your payment to your bank, and your bank releases the money into your PayPal Balance account.